{"id":27284,"date":"2019-10-01T17:39:21","date_gmt":"2019-10-01T12:09:21","guid":{"rendered":"http:\/\/mycbseguide.com\/blog\/?p=27284"},"modified":"2019-10-05T12:43:56","modified_gmt":"2019-10-05T07:13:56","slug":"accounting-for-debentures-class-12-accountancy-practice-questions","status":"publish","type":"post","link":"https:\/\/mycbseguide.com\/blog\/accounting-for-debentures-class-12-accountancy-practice-questions\/","title":{"rendered":"Accounting for Debentures Class 12 Accountancy Practice Questions"},"content":{"rendered":"

Accounting for Debentures Class 12 Accountancy Practice Questions. <\/strong>myCBSEguide has just released Chapter Wise Question Answers for class 12 Accountancy. There chapter wise Practice Questions with complete solutions are available for download in\u00a0myCBSEguide<\/a>\u00a0<\/strong>website and mobile app. These test papers with solution are prepared by our team of expert teachers who are teaching grade in CBSE schools for years. There are around 4-5 set of solved Accountancy Extra questions from each and every chapter. The students will not miss any concept in these Chapter wise question that are specially designed to tackle Exam. We have taken care of every single concept given in\u00a0CBSE Class 12 Accountancy\u00a0<\/a><\/strong>syllabus and questions are framed as per the latest marking scheme and blue print issued by CBSE for class 12.<\/p>\n

CBSE Class 12 Accountancy Test Paper<\/strong><\/p>\n

Download as PDF<\/a><\/strong><\/p>\n

\u00a0Accountancy Class 12 Extra Questions<\/h2>\n
Ch-8 Accounting for Debenture<\/strong><\/p>\n
\n<\/div>\n
    \n
  1. Raghav Limited purchased a running business from Krishna traders for a sum of \u20b915,00,000 payable \u20b93,00,000 by cheque and for the balance issued 9% debentures of \u20b9100 each at par. The assets and liabilities consisted of the following: Plant and Machinery \u20b94, 00,000 Building \u20b96, 00,000 Stock \u20b95,00,000 Debtors \u20b93, 00,000 Creditors \u20b92,00,000.Calculate amount of capital reserve\n
      \n
    1. \u20b9200000<\/span><\/li>\n
    2. \u20b9100000<\/li>\n
    3. None of\u00a0these<\/li>\n
    4. \u20b9150000<\/li>\n<\/ol>\n<\/li>\n
    5. How would you show Debentures in the Balance sheet i.e. under which heading?\n
        \n
      1. Share Capital<\/li>\n
      2. Reserve and Surplus<\/li>\n
      3. Non-current Liabilities<\/li>\n
      4. Current Liabilities<\/li>\n<\/ol>\n<\/li>\n
      5. The following are the types of debentures except\n
          \n
        1. Perpetual Debentures<\/li>\n
        2. Equity Debentures<\/li>\n
        3. Convertible debentures<\/li>\n
        4. Redeemable debentures<\/li>\n<\/ol>\n<\/li>\n
        5. Vinod Limited redeem its 500 debentures of 100 each by purchasing these debentures at \u20b994 from the open market for cancellation. Calculate the profit on cancellation of own debentures.\n
            \n
          1. 3,000<\/li>\n
          2. 5000<\/li>\n
          3. 2500<\/li>\n
          4. 2000<\/li>\n<\/ol>\n<\/li>\n
          5. When does a company issue debentures as collateral security\n
              \n
            1. When lender does not gives additional security<\/li>\n
            2. When lender demands additional security<\/li>\n
            3. When lender does not demands additional security<\/li>\n
            4. When lender gives additional security<\/li>\n<\/ol>\n<\/li>\n
            5. Beta Ltd issued 5,000, 9% debentures of Rs.500 each. Pass the necessary journal entries for the issue of debentures in the books of the company When debentures are issued at a premium of 25% to the vendors for machinery purchased for Rs. 6,25,000.<\/li>\n
            6. \n
              \n

              What is meant by the purchase of own debentures?<\/p>\n<\/div>\n<\/li>\n

            7. \n
              \n

              State the provisions of Companies Act, 2013 for the creation of debenture redemption reserve.<\/p>\n<\/div>\n<\/li>\n

            8. \n
              \n

              What is meant by convertible debentures?<\/p>\n<\/div>\n<\/li>\n

            9. \n
              \n

              State in brief, the SEBI Guidelines regarding Debenture Redemption Reserve.<\/p>\n<\/div>\n<\/li>\n

            10. \n
              \n

              Animesh Ltd. issued 1,000, 12 % Debenture of 100 each in the following manner:<\/p>\n

                \n
              1. For cash at par at Rs. 50,000 nominal value.<\/li>\n
              2. For creditors of Rs. 45,000 against purchase of machinery at nominal value of Rs. 35,000.<\/li>\n
              3. To S.B.I. bank against a loan of Rs. 10,000 as collateral security at nominal value of Rs. 15,000.<\/li>\n<\/ol>\n

                Pass Journal entries.<\/p>\n<\/div>\n<\/li>\n

              4. \n
                \n

                Tata Ltd issued 5,000, 10% debentures of Rs 100 each on 1st April, 2012. The issue was fully subscribed. According to the terms of issue, interest on debentures is payable half-yearly on 30th September and 31st March and tax deducted at source is 10%.
                \nPass the necessary journal entries related to the debenture interest for the half-yearly ending on 31st March, 2013 and transfer of interest on debentures to statement of profit and loss.<\/p>\n<\/div>\n<\/li>\n

              5. \n
                \n

                On 1st April, 2013, the following balances appeared in the books of Blue and Green Ltd.
                \n12% debentures (Redeemable on 31st August, 2015) (Rs.) 20,00,000
                \nDebenture Redemption Reserve (Rs.) 2,00,000
                \nThe company met the requirements of the Companies Act, 2013 regarding Debenture Redemption Reserve and Debenture Redemption Investments and redeemed the debentures.
                \nIgnoring interest on investments pass necessary journal entries for the above transactions in the books of company.<\/p>\n<\/div>\n<\/li>\n

              6. \n
                \n

                On 1st April, 2015 KK Ltd issued 500, 9% debentures, of Rs.500 each at a discount of 4%, redeemable at a premium of 5% after three years. Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2016 assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.<\/p>\n<\/div>\n<\/li>\n

              7. \n
                \n

                X Ltd. Had Rs.12,00,000, 11% Debentures outstanding on 1st April, 2012. During the year, it took a loan of Rs.4 Lakh from Canara Bank for which company deposited debentures of Rs. Lakh as collateral security.<\/p>\n

                Pass journal entries and show how these transactions will appear in Balance Sheet of the company.<\/p>\n<\/div>\n<\/li>\n<\/ol>\n

                Ch-8 Accounting for Debenture<\/strong><\/p>\n

                \n

                Answer<\/strong><\/p>\n

                  \n
                1. \n
                    \n
                  1. \u20b9100000,\u00a0Explanation:\u00a0<\/strong>Amount of Capital Reserve = 1,00,000
                    \n\n\n\n\n\n\n\n\n\n
                    Plant and machinery<\/td>\n4,00,000<\/td>\n<\/tr>\n
                    Building<\/td>\n6,00,000<\/td>\n<\/tr>\n
                    Stock<\/td>\n5,00,000<\/td>\n<\/tr>\n
                    Debtors<\/td>\n3,00,000<\/td>\n<\/tr>\n
                    To Creditors<\/td>\n2,00,000<\/td>\n<\/tr>\n
                    To Krishna Traders<\/td>\n15,00,000<\/td>\n<\/tr>\n
                    To Capital Reserve<\/td>\n1,00,000 (Bal. fig.)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/li>\n<\/ol>\n
                      \n
                    1. Non-current Liabilities,\u00a0Explanation:\u00a0<\/strong>Debentures issued are shown under the heading of Non-current liabilities and sub-heading Long Term Borrowings.<\/li>\n<\/ol>\n
                        \n
                      1. Equity Debentures,\u00a0Explanation:\u00a0<\/strong>There are different types of debentures except Equity Debentures.\n
                          \n
                        1. Redeemable Debentures<\/li>\n
                        2. Perpetual Debentures<\/li>\n
                        3. Convertible Debentures<\/li>\n
                        4. Coupon Rate Debentures<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n
                            \n
                          1. 3,000,\u00a0Explanation:\u00a0<\/strong>Profit on cancellation of own debentures will be \u20b93,000. Profit per debentures is = 100 \u2013 94 = 6 500 Debentures\u00d76 = 3,000<\/li>\n<\/ol>\n
                              \n
                            1. When lender demands additional security,\u00a0Explanation:\u00a0<\/strong>A company issue its debentures as collateral security when lender demands for the additional security in addition to the prime or principal security.<\/li>\n<\/ol>\n<\/li>\n
                            2. Books of Beta Ltd.<\/strong>JOURNAL<\/strong>
                              \n\n\n\n\n\n\n\n\n\n
                              Date<\/th>\nParticulars<\/th>\n<\/th>\nL.F.<\/th>\nAmt (Dr)<\/th>\nAmt (Cr)<\/th>\n<\/tr>\n<\/thead>\n
                              <\/td>\nMachinery A\/c<\/td>\nDr<\/td>\n<\/td>\n6,25,000<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Vendor’s A\/c
                              \n(Being machinery purchased)<\/td>\n                              		<\/td>\n<\/td>\n<\/td>\n6,25,000<\/td>\n<\/tr>\n
                              <\/td>\nVendor’s A\/c<\/td>\nDr<\/td>\n<\/td>\n6,25,000<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo 9% Debentures A\/c (1,000\u00d7<\/span><\/span><\/span>\u00d7<\/span><\/span><\/span>500)<\/td>\n<\/td>\n<\/td>\n<\/td>\n5,00,000<\/td>\n<\/tr>\n
                              <\/td>\nTo Securities Premium Reserve A\/c (1,000\u00d7<\/span><\/span><\/span>\u00d7<\/span><\/span><\/span>125)
                              \n(Being 9%debentures issued to vendor at premium of 25%)<\/td>\n                              		<\/td>\n<\/td>\n<\/td>\n1,25,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                              Working Note<\/strong>\u00a0:
                              \n1. Number of Debentures Issued\u00a0=<\/span>\u00a0Amount Due to Vendor\u00a0<\/span>\u00a0Issue Price Per Debenture\u00a0<\/span><\/span>=<\/span>6<\/span>,<\/span>25<\/span>,<\/span>000<\/span><\/span>625<\/span>(<\/span>500<\/span>+<\/span>125<\/span>)<\/span><\/span><\/span>=<\/span>1<\/span>,<\/span>000<\/span><\/span><\/span>=\u00a0Amount Due to Vendor\u00a0\u00a0Issue Price Per Debenture\u00a0=6,25,000625(500+125)=1,000<\/span><\/span><\/span>debentures<\/p>\n

                              2. Debentures are said to have been issued at premium when Debentures are issued more than the nominal (face) value of debenture.<\/p>\n

                              3. Premium on Issue of Debentures is capital receipt and is credited to Securities Premium Reserve Account.<\/p>\n

                              4. Amount of Premium = 500*25% = Rs. 125<\/li>\n

                            3. According to the Companies Act, 2013, a company can purchase its own debentures from the open Market if it is authorised by its Articles of Association. This is known as purchase of own debentures. It can done with motive for investment or for cancellation.<\/li>\n
                            4. As per Section 71(4) of the Companies Act, 2013 and companies (share capital and debentures) rules, every company issuing debentures is required to create debenture redemption reserve of an amount that is atleast equal to 25% of the nominal (face) value of debentures that are redeemable by it. If the company have an amount in their profit than it can create it by 100% and if it is financial institutions than it will be nil.<\/li>\n
                            5. The holders of such debentures are given an option to exchanging the amount of their debentures with equity shares or other securities after a specified period.<\/li>\n
                            6. As per SEBI Guidelines, an amount equal to 25% of face value of the debentures are to be redeemed, must be transferred to DRR before the redemption begins.<\/li>\n
                            7. Books of Animesh Ltd.<\/strong>Journal<\/strong>
                              \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
                              Date<\/strong><\/td>\nParticulars<\/strong><\/td>\n<\/td>\nL.F.<\/strong><\/td>\nDr. (Rs.)<\/strong><\/td>\nCr. (Rs.)<\/strong><\/td>\n<\/tr>\n
                              <\/td>\nDebentures application and allotment a\/c<\/td>\nDr.<\/td>\n<\/td>\n50,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo 12% Debentures a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n50,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being 12% Debentures issued at par)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nBank A\/c<\/td>\nDr.<\/td>\n<\/td>\n50,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo Debentures application and allotment a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n50,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being money received on 500 debentures @ Rs. 100)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nMachinery a\/c<\/td>\nDr.<\/td>\n<\/td>\n45,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo Vendor’s a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n45,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being machinery purchased)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nVendor a\/c<\/td>\nDr.<\/td>\n<\/td>\n45,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo 12% Debentures a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n35,000<\/td>\n<\/tr>\n
                              <\/td>\nTo Securities Premium a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n10,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being Debentures issued to vendors at a premium)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nBank a\/c<\/td>\nDr.<\/td>\n<\/td>\n10,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo Bank Loan a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n10,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being Loan borrowed)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nDebentures suspense a\/c<\/td>\nDr.<\/td>\n<\/td>\n15,000<\/td>\n…..<\/td>\n<\/tr>\n
                              <\/td>\nTo 12% Debentures a\/c<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n15,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being Debentures issued as collateral security)<\/td>\n<\/td>\n<\/td>\n…..<\/td>\n…..<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/li>\n
                            8. Books of Tata Ltd.<\/strong>JOURNAL<\/strong>
                              \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
                              Date<\/strong><\/th>\nParticulars<\/strong><\/th>\n<\/th>\nL.F.<\/strong><\/th>\nAmt (Dr)<\/strong><\/th>\nAmt (Cr)<\/strong><\/th>\n<\/tr>\n<\/thead>\n
                              2012<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              30-Sep<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nDebenture Interest A\/c\u00a0(<\/span>5<\/span>,<\/span>00<\/span>,<\/span>000<\/span>\u00d7<\/span>10<\/span>100<\/span><\/span>\u00d7<\/span>6<\/span>12<\/span><\/span><\/span>)<\/span><\/span><\/span><\/span>(5,00,000\u00d710100\u00d7612)<\/span><\/span><\/span><\/td>\nDr<\/td>\n<\/td>\n25,000<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Income Tax Payable A\/c (25,000 x 10%)<\/td>\n<\/td>\n<\/td>\n<\/td>\n2,500<\/td>\n<\/tr>\n
                              <\/td>\nTo Debenture Holders A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n22,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being interest made due for half yearly ending 30th September)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              30-Sep<\/td>\nDebenture Holders A\/c<\/td>\nDr<\/td>\n<\/td>\n22,500<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Bank A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n22,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being interest paid to debenture holders)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              30-Sep<\/td>\nIncome Tax Payable A\/c<\/td>\nDr<\/td>\n<\/td>\n2,500<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Bank A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n2,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being payments of tax on interest on debentures)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              2013<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              31-Mar<\/td>\nDebenture Interest A\/c\u00a0(<\/span>5<\/span>,<\/span>00<\/span>,<\/span>000<\/span>\u00d7<\/span>10<\/span>100<\/span><\/span>\u00d7<\/span>6<\/span>12<\/span><\/span><\/span>)<\/span><\/span><\/span><\/span>(5,00,000\u00d710100\u00d7612)<\/span><\/span><\/span><\/td>\nDr<\/td>\n<\/td>\n25,000<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Income Tax Payable A\/c (25,000×10%)<\/td>\n<\/td>\n<\/td>\n<\/td>\n2,500<\/td>\n<\/tr>\n
                              <\/td>\nTo Debentureholders’ A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n22,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being interest made due for half yearly ending 31st March)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              31-Mar<\/td>\nDebentureholders’ A\/c<\/td>\nDr<\/td>\n<\/td>\n22,500<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Bank A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n22,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being interest paid to debentureholders’)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              31-Mar<\/td>\nIncome Tax Payable A\/c<\/td>\nDr<\/td>\n<\/td>\n2,500<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Bank A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n2,500<\/td>\n<\/tr>\n
                              <\/td>\n(Being payment of tax or interest on debentures)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              31-Mar<\/td>\nStatement of Profit and Loss<\/td>\nDr<\/td>\n<\/td>\n50,000<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\nTo Interest on Debentures A\/c<\/td>\n<\/td>\n<\/td>\n<\/td>\n50,000<\/td>\n<\/tr>\n
                              <\/td>\n(Being interest on debentures account transferred to statement of profit and loss)<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
                              <\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                              NOTES :<\/p>\n