Aman Ltd. issued to the public 16,000, 10% Debentures of ₹ 100 each at a discount of 2%. The amount payable by applicants is as ₹ 50 per debenture along with application and balance amount at the time of allotment. The i

CS Executive · Corporate and Management Accounting · PYQS · June 2019
Aman Ltd. issued to the public 16,000, 10% Debentures of ₹ 100 each at a discount of 2%. The amount payable by applicants is as ₹ 50 per debenture along with application and balance amount at the time of allotment. The issue was fully underwritten by Gama Ltd. for commission at the rate of 1% of nominal value of the debentures underwritten. The whole of the issue was subscribed by the members of the public at large. The company paid underwriting commission in the form of 10% Debentures of ₹ 100 each. Pass the necessary journal entries in the books of Aman Ltd. for the above mentioned transactions.

Answer & Explanation:

Journal of Aman Ltd. S. No. Particulars Rs. Rs. 1. Bank a/c Dr. 8,00,000 To 10% Debenture Application a/c 8,00,000 (being receipt of application money on 16,000, 10% Debentures of ₹ 50 per debenture) 2. 10% Debenture Application a/c Dr. 8,00,000 10% Debenture Allotment a/c Dr. 7,68,000 Discount of issue of Debenture a/c Dr. 32,000 To 10% Debenture a/c 16,00,000 (being allotment of 16,000, 10% debentures of ₹ 100 each at a discount of ₹ 2 per debenture) 3. Underwriting commission on issue of debenture a/c Dr. 16,000 To Gama Ltd. 16,000 (being underwriting commission @ 1% on ₹ 16 lakh, the nominal value of debentures underwritten) 4. Gama Ltd. a/c Dr. 16,000 To 10% Debentures a/c 16,000 (being allotment of 160, 10% debentures of ₹ 100 each at par to underwriters by way of payment of underwriting commission due to them) 5. Bank a/c Dr. 7,68,000 To 10% Debenture allotment a/c 7,68,000 (being receipt of allotment money on 16,000, 10% debentures @ ₹ 48 per debenture)

Topics: Company Accounts

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