(ii) A company issued ₹80,000, 12% Debentures at premium of 10%, redeemable at par. (iii) A company issued ₹80,000, 12% Debentures at discount of 10%, redeemable at par. Q.2. Give journal entries for the following cases when face value of a Debenture is ₹100 : (i) A company issued 2,000, 12% Debentures at par, redeemable at par. (ii) A company issued 2,000, 12% Debentures at premium of 10%, redeemable at par. (iii) A company issued 2,000, 12% Debentures at discount of 10%, redeemable at par. CASE 4: When debentures are issued at par and are redeemable at premium. A Debenture is issued at ₹ 100 with the condition that it will be redeemed at 10% premium i.e. at ₹ 110 on maturity. ₹ 10 to be paid as Premium at the time of redemption is a known loss at the time of issue of debenture. As per Convention of Conservatism it should be recorded as loss at the time of issue of debenture by debiting “loss on issue of Debentures A/c”. ENTRIES FOR ISSUE: Bank A/c [₹100*1] Dr To Debenture Application A/c [₹100*1] (Being the application money received) 100 100 Debenture Application A/c [₹100*1] Dr Loss on issue of Debentures A/c [₹10*1] Dr To Debentures A/c [₹100*1] . To Premium on Redemption of Debentures A/c [₹10*1] (Being application money transferred to Debentures a/c issued at par, redeemable at premium) 100 10 100 10 ENTRIES FOR REDEMPTION Debentures A/c [Face value ₹100*1 ] Dr Premium on Redemption of Debentures A/c [₹10*1] To Debentureholders A/c [₹110*1] 100 10 110 Debentureholders A/c [₹110(F.V. of debenture +premium)*1] Dr To Bank A/c [₹100*1] (Being amount of debenture along with premium paid to debentureholders) 110 110
To Debentures A/c [1* ₹100F.V.] . To Security Premium Reserve A/c [premium at issue] . To Premium on Redemption of Debentures A/c [premium at redemption] (Being issue of debenture at Premium, redeemable at Premium) 100 10 15 ENTRIES FOR REDEMPTION Debentures A/c [Face value ₹100*1 ] Dr Premium on Redemption of Debentures A/c [₹10*1] To Debenture holders A/c [₹110*1] 100 10 110 Debentureholders A/c [₹110(F.V. of debenture +premium)*1] Dr To Bank A/c [₹100*1] (Being amount of debenture along with premium paid to debenture holder) 110 110 Example 1:- AB Ltd. issued 5,000, 7% Debentures of ₹ 100 each, at a premium of ₹ 5 each, redeemable at 10% premium. Pass necessary journal entries. Bank A/c [5,000* ₹105 (₹100+₹5)] Dr . To Debenture Application A/c (Being application money received) 5,25,000 5,25,000 Debenture Application A/c [5,000*₹105] Dr Loss on issue of Debentures A/c [5,000*₹10] Dr To Debentures A/c [5,000*₹100] . To Security Premium Reserve A/c [5,000*₹5] . To Premium on Redemption of Debentures A/c [5,000*₹10] (Being issue of debentures at Premium, redeemable at Premium) 5,25,000 50,000 5,00,000 25,000 50,000 Example 2:- A Company issued ₹ 5,00,000, 9% Debentures of ₹ 100 each at ₹ 105 redeemable at a premium of 10% after five years. Pass necessary journal entries Bank A/c Dr To Debenture Application A/c (Being the application money received on 5,000 debentures @ ₹ 105 per debenture) 5,25,000 5,25,000
16 Shares Option Outstanding Account Shareholders' Funds Reserves And Surplus 17 Debentures/Bonds Non-Current Liabilities Long-term Borrowings 18 Term Loan From Bank Non-Current Liabilities Long-term Borrowings 19 Long Term Loans and Advances Non-Current Liabilities Long-term Borrowings 20 Advance Received from Customer(Long-term) Non-Current Liabilities Other Non-Current Liabilities 21 Mortgage Loan Non-Current Liabilities Long-term Borrowings 22 10% Debentures Non-Current Liabilities Long-term Borrowings 23 Premium on Redemption of Debentures Non-Current Liabilities Other Non-Current Liabilities 24 Encashment of Employees Earned Leaves Payable on Retirement Non-Current Liabilities Long-term Provisions 25 Loans Repayable on Demand Current Liabilities Short-Term Borrowings 26 Bank Overdraft(Cash Credit) Current Liabilities Short-Term Borrowings 27 Deposits Current Liabilities Short-Term Borrowings 28 Loans From Other Parties Repayable Within 12 months Current Liabilities Short-Term Borrowings 29 Provision For Expenses Current Liabilities Short-Term Provisions 30 Provision For Tax Current Liabilities Short-Term Provisions 31 Proposed Dividend Current Liabilities Short-Term Provisions 32 Other Provisions Current Liabilities Short-Term Provisions 33 Provision For Employee Benefits Current Liabilities Short-Term Provisions 34 Current Maturities of Long-term Debt Current Liabilities Other Current Liabilities 35 Calls-in-Advance Current Liabilities Other Current Liabilities 36 Share Application Money(Refundable) Current Liabilities Other Current Liabilities 37 Unclaimed Dividend Current Liabilities Other Current Liabilities 38 Bills Payable Current Liabilities Trade Payables 39 Advance Received from Customer Current Liabilities Other Current Liabilities 40 Sundry Creditors Current Liabilities Trade Payables 41 Interest Accrued (whether due or not due) on Debentures Current Liabilities Other Current Liabilities 42 Interest Accrued and due on Secured Loans Current Liabilities Other Current Liabilities 43 Interest Accrued but not due on Unsecured Loans Current Liabilities Other Current Liabilities 44 Trade Payables Current Liabilities — 45 Interest on Calls-in-Advance Current Liabilities Other Current Liabilities 46 Unpaid Dividend Current Liabilities Other Current Liabilities 47 Outstanding Salary Current Liabilities Other Current Liabilities 48 Commission Received in Advance Current Liabilities Other Current Liabilities 49 Office Equipments Non-Current Assets Fixed Assets(Tangible)
87 Prepaid Rent Current Assets Other Current Assets 88 Interest Accrued on Investment Current Assets Other Current Assets 89 Work-in-Progress Current Assets Inventories 90 Bills of Exchange Current Assets Trade Receivables 91 Stock of Finished Goods Current Assets Inventories 92 Stock-in-Trade Current Assets Inventories 93 Balance with Banks held as Margin Money Current Assets Cash and Cash Equivalents 94 Investment in Partnership Firms Current Assets Current Investments 95 Shares Capital Shareholders' Funds — 96 Reserves And Surplus Shareholders' Funds — 97 Money Received Against Share Warrants Shareholders' Funds — 98 Arrears of Fixed Cumulative Preference Dividend As a footnote as Contingent Liability 99 Uncalled Liability on Partly Paid Shares Commitments in Note to Accounts 100 Bills Discounted but not Matured Contingent Liabilities in Note to Accounts STUDY MATERIAL/ASSIGNMENT FOR THE LATE BLOOMERS ACADEMIC YEAR-2016-17 RETIRING OF A PARTNER AND DEATH OF A PARTNER Learning objectives:- to attempt small theoretical questions to find NPSR and SR/GR to make treatment of goodwill in the above cases to pass journal entries for Revaluation/Re-assessment, treatment of goodwill, distribution of past profits and losses, for the settlement of the retiring partner; to prepare Revaluation Account; to prepare partners’ Capital Account along with Retiring Partner (without and with capital adjustment); to prepare Deceased Partner’s Capital Account; to prepare deceased partner’s Executor Account; to calculate and provide salary, share in profit and interest on capital on deceased partner’s capital till the date of death; to prepare balance sheet after Retirement or Death of a partner as the case may be; to complete a solution by filling the fill in the blanks as in the case of Retirement or Death. 1. Fill in the blanks
Advertisement suspense account appeared on the asset side of the Balance sheet amounting Rs 28000 Creditors of Rs 40,000 agreed to take over the stock of Rs 30,000 at a discount of 10% and the balance in cash. B agreed to take over Investments of Rs 5000 at Rs 4900 Loan of Rs 15000 advanced by A to the firm was paid off. Bank loan of Rs 12000 was paid off. JOURNAL SN Particulars LF Debit(Rs) Credit(Rs) a) Realisation account –Dr A’s Capital account (Being commission given to A) 4000 4000 b) A’s Capital account –Dr B’s Capital account –Dr Advertisement Suspense account (Being Advertisement suspense written off) 14000 14000 28000 c) Realisation account –Dr Cash account (Being creditors paid off) 13000 13000 d) B’s Capital account –Dr Realisation account (Being asset taken over by the partner) 4900 4900 e) A’s Loan account –Dr Cash account (Being partners loan paid off) 15000 15000 f) Realisation account -- Dr Cash account (Being Bank loan paid off) 12000 12000 X and Y are partners in the firm who decided to dissolve the firm. Assets and Liabilities are transferred to Realisation account. Pass necessary journal entries— Creditors were Rs 1,00,000. They accepted Building valued Rs 1,40,000 and paid cash to the firm Rs 40,000 Aman, an old customer whose account of Rs 1000 was written off as bad in the previous year paid 40% of the amount. There were 300 shares of Rs 10 each in ABC Ltd which were acquired for Rs 2000 were now valued at Rs 6 each. These were taken over by the partners in the profit sharing ratio. Profit on Realisation Rs 42000 was divided among the partners. Land and Building (Book value Rs 1, 60,000) was sold for Rs 3,00,000 through a broker who charged 2% commission on the deal. Plant and machinery (Book value Rs 60,000) was handed over to the creditor in full settlement of his claim.
Dr. Partners’ Capital A/cs Cr. Particulars Ajay Rs. Vijay Rs. Raju Rs Particulars Ajay Rs Vijay Rs. Raju Rs. To Goodwill A/c To Investments A/c To Cash A/c To Balance of Capital c/d (after adjustment) To Ajay’s Current A/c To Balance c/d -------- 3,750 2,400 -------- By Balance b/d By General reserve A/c By Revaluation A/c By Premium for Goodwill By Balance of Capital b/d (after adjustment) By Cash A/c By Vijay’s Current A/c 74,250 41,550 74,250 41,550 - ---------- - ----------- 61,750 - 31,650 -------- -------- - 61,750 35,025 23,350 61,750 35,025 23,350 Balance Sheet of the New Firm Liabilities Rs. Assets Rs. Creditors Bills Payable Capital A/cs: Ajay ------------- Vijay ------------ Raju ------------- Provision for Bad and Doubtful debts Outstanding salary Outstanding Repairs Ajay’s Current A/c 17,800 8,000 1,16,750 1,000 2,400 100 ------------ Land and Building Plant and machinery Stock Debtors Investments Cash Prepaid Insurance Vijay current A/c 38,000 30,000 20,000 25,000 4,000 28,550 500 --------- 1,49,425 1,49,425 ---------- ----------
To stock To Debtors To Plant and Machinery To Bank Sundry Creditors 16,000 Bills payable 3,000 Mortgage Loan 15,000 TO Bank (Outstanding repairs) TO Bank (Expenses) 10,000 25,000 40,000 34,400 400 620 By Provision for bad debts By Sundry Creditors By Bills Payable By Mortgage Loan By Bank- Assets Realized : Stock 6,700 Debtors 12,500 Plant and Machinery 36,000 By Bank-Unrecorded Assets Realised By------------------------ 5,000 16,600 3,400 15,000 55,200 6,220 --------- 1,10,420 1,10,420 Dr. Capital Account Cr. Particulars Bora Rs. Singh Rs. Ibrahim Rs. Particulars Bora Rs. Singh Rs. Ibrahi Rs. By balance b/d By general reserve 22,000 2,500 18,000 1,500 10,000 500 24,500 19,500 10,500 24,500 19,500 10,500 Dr. Bank account Cr. Particulars Rs. Particulars Rs. To Balance b/d To Realisation (Assets realized) ------------------------------ 19,500 55,200 ------------- By Realisation (liabilities) By Realisation (Unrecorded Liabilities By------------------------- By-------------------------- 34,000 400 ------------- ------------- 80,920 80,920
Q.10. Mala, Neela and Kala were partners sharing profits in the ratio of 3:2:1. On 01.03.2015 their firm was dissolved. The assets were realized and liabilities were paid off. The accountant prepared Realisation Account, Partner’s Capital Accounts and Cash Account, but forgot to post few amounts in these accounts.You are required to complete these below given accounts by posting correct amounts: Dr. Realisation Account Cr. Particulars Rs Particulars Rs. To Sundry Assets Machinery 10,000 Stock 21,000 Debtors 20,000 Prepaid Insurance 400 Investments 3,000 To Mala’s Capital A/c-Sheela’s Loan TO Cash- Creditors Paid To Cash-Dishonored Bill Paid To Cash-Expenses 54,400 13,000 15,000 5,000 800 By Provision for bad debts By Sundry Creditors By Sheela’s Loan By Repairs and Renewals Reserve By Cash – Assets Sold: Machinery 8,000 Stock 14,000 Debtors 16,000 By Mala’s Capital-Investments By---------------------- 1,000 15,000 13,000 1,200 38,000 2,000 88,200 88,200 Dr. Capital Accounts Cr. Particulars Mala Rs. Neela Rs. Kala Rs. Particulars Mala Rs. Neela Rs. Kaala Rs. ------ To Realisation A/c To Cash 12,000 ------ 9,000 -------- ------------ By RealisationA/c By Cash ---------- --------- --------- 1,000 23,000 15,000 3,000 23,000 15,000 3,000 Dr. Cash Account Cr. Particulars Rs. Particulars Rs.