Ownclasses

Pass necessary Journal Entries for the following transactions in the books of Sudarshan Ltd:
(i) Redeemed 750, 12% Debentures of Rs 75 each by converting into Equity Shares of Rs 100 each. The Equity Shares were issued at a discount of 10%.
(ii) Converted 550, 12% Debentures of Rs 1,000 each into New 13% Debentures of Rs 100 each. The New Debentures were issued at a premium of 10%.

Answer

Journal entries

Date

Particulars

LF

Debit (Rs)

Credit(Rs)

(i)

 

 

 

 

 

 

 

 

 

(ii)

12% debentures a/c                      Dr

                   To debenture holders a/c

(being 750 debentures @ Rs 75 each redeemed to debenture holders)

 

56,250

 

 

 

56,250

6250

 

 

 

5,50,000

 

 

 

5,50,000

 

 

 

56,250

 

 

 

 

62500

 

 

 

5,50,000

 

 

 

5,00,000

 

50,000

 

 

 Debenture holders a/c              Dr

Discount on issue of shares a/c   Dr

                To equity share capital a/c

(being 12% debentures converted to equity shares of Rs 100 each issued at a discount of 10%)

12% debentures a/c                    Dr

               To debenture holders a/c

(being 12% debentures due to debenture holders)

Debentures holders a/c                    Dr

               To 13% debentures a/c

              To premium on issue of

                  debenture a/c

(being 550, 12% debentures of Rs 1000 each converted to 13% debentures of rs 100 each at 10% premium)

 

Working note:
(i) Amount due to debenture holders 56250 i.e.(750*75)
Number of equity shares to be issued at 10% discount =56250/90 =625 shares
Discount on issue of shares =625*10=6250 

(ii) 550, 12% debentures @ 1000 each =5,50,000
Number of 13% debentures to be issued =5,50,000/110= 5000 shares
Premium on issue of debentures = 5000*10=50,000