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Question:

On 1st April, 2014, KK Ltd. invited applications for issuing 5,000 10% debentures of Rs. 100 each at a premium of Rs. 10 per debenture, payable as follows:On application Rs. 30 per debenture;On allotment Rs. 40 per debenture (including premium);On first and final call Rs. 40 per debenture.Applications for 6,000 debentures were received. Allotment was made pro-rata to the applicants. Excess application money was refunded to the applicants.All the money was duly received except one applicant holding 100 debentures who failed to pay the first and final call. These debentures were forfeited. Pass necessary journal entries in the books of KK Ltd.

Solution:

sr.no particulars amt amt1 Bank a/c ____drTo debenture application a/c(being application money received) 564000056400002 Debenture application ____drTo bank a/c(Being amount refunded) 94000940003 Debenture application ____drLoss on issue a/c _____drTo debenture a/cTo Premium on redemption a/c(Being redemption entry passed) 47000080000050000005000004 Profit and loss appropriation a/c___drTo debenture redemption reserve a/c(Being DRR created) 250000025000005 DRR____drTo general reserve a/c(Being DRR transferred) 25000002500000