Question

PQ Ltd. invited applications for issuing 6,000, 11% debentures of ₹ 100 each at a premium of ₹ 10 per debenture. The amount was payable as follows:
On Application – ₹ 30 per debenture
On Allotment – ₹ 80 per debenture (including premium)
The debentures were fully subscribed and all money was duly received. Pass necessary journal entries for the above transactions in the books of PQ Ltd.

Hint:

Always split premium from face value in the entry for allotment.

Answer 1

Journal Entries:
Bank A/c Dr. ₹ 1,80,000
             To Debentures Application A/c ₹ 1,80,000
(Application money received)

Debentures Application A/c Dr. ₹ 1,80,000
              To 11% Debentures A/c ₹ 1,80,000
(Application transferred)

Bank A/c Dr. ₹ 4,80,000
              To Debentures Allotment A/c ₹ 4,80,000
(Allotment money received)

Debentures Allotment A/c Dr. ₹ 4,80,000
              To 11% Debentures A/c ₹ 3,60,000
              To Securities Premium A/c ₹ 1,20,000
(Allotment transferred)