Issue of Debentures Exam Based Problems and Answers

Accounting for debentures exam based problems and questions are the BEST collection of problems for sure shot success in the examination.

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DEBENTURES ISSUE

PROBLEM: 1

AV Company Ltd issued 1,000 debentures of $/₹/Rs 100 each at a premium of 10% payable with allotment money. Applications were received for 1,500 debentures at the rate of Rs 20 per debenture. Application money on 500 debentures was transferred to allotment.

Required: Necessary entries to record

Excess on application = Rs 10,000; Cash received on allotment = Rs 80,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 2

AB Company Ltd offered 1,000, 10%debentures of $/₹/Rs 100 for public subscription making Rs 20 payable with the application. Applications were received for 1,500 debentures. Applications money on 200 debentures was applied for allotment and the application money on 300 debentures was refunded.

Give necessary entries to record debenture applications and allotment

[Answer: Excess for allotment = Rs 4,000; Cash received on allotment = Rs 76,000]

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 3

AX Company Ltd issued 1,000; 15%debentures of $/₹/Rs 100 at a premium of 10%f payable as:

        Rs 30 on application

        Rs 40 on allotment (including premium)

        Rs 40 on first and final call

Applications were received for 2,000 debentures and the following allotment procedures were followed: applications for 500 debentures were to receive in full, applications of 800 debentures to receive 50% of the applications they have made and 400 applicants were to receive only 25% of the applications they have made. Application money on 300 debentures, whom no debentures have been allotted were to be refunded.

Required: Journal entry to record debenture application, allotment and final call

[Answer: Excess on allotment (12,000 + 4,000) = Rs 16,000;

Excess on calls = Rs 4,000; Returned money (9,000 + 1,000) = Rs 10,000;

Received on allotment = Rs 24,000; Received on calls = Rs 36,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 4

AP Company Ltd issued 1,000; 12%debentures of $/₹/Rs 100 at a discount of 10%, the money payable as:

        Rs 20 on application; Rs 20 on allotment (discount adjusted); Rs 50 one year after

2,000 applications were received and the directors made the following allotment decisions:

a.     Applications of 500 debentures were to be received full

b.    Applications of 1,000 debentures were to receive 500 debentures on pro-rata

c.     Applications of remaining debentures were to be refunded

Holder of 100 debentures paid the entire balance with allotment

Required: Necessary entries for debenture application and allotment

[Answer: Returned money = Rs 10,000; Excess money = Rs 10,000;

Advance for calls = Rs 5,000;

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