NCERT Solutions Class 12 Accountancy Company Accounts and Analysis of Financial Statements Chapter 2

Q.1 What is meant by a Debenture?

Ans.

Debenture is a written instrument acknowledging a debt under the common seal of the company. It contains a contract for repayment of principal after a specified period or at intervals or at the option of the company and for payment of interest at fixed rate payable usually half yearly on fixed dates.

Q.2 What does a Bearer Debenture mean?

Ans.

Bearer debentures are the debentures which can be transferred by way of delivery and the company does not keep any record of the debentureholders. Interest is paid to the person who produces the interest coupon attached to such debentures.

Q.3 State the meaning of ‘Debentures issued as a collateral security’.

Ans.

A collateral security may be defined as a subsidiary security or additional security besides the primary security when a company obtains a loan or overdraft from bank or any other financial institutions. It may pledge or mortgage some assets as a secured loan against the said loan. But the lending institutions may insist on additional assets as collateral security so that the amount of loan can be realised in full with the help of collateral security in case the amount from the sale of principal security falls short of the loan money. In such situation, the company may issue its own debentures to the lenders in addition to some assets already pledged. Such an issue of debentures is known as ‘Debentures issued as Collateral Security’.

Q.4 What is meant by ‘Issue of debentures for consideration other than cash’?

Ans.

Sometimes a company purchase assets from vendors and instead of making payment in cash issues debentures for consideration thereof. Such issue of debentures is called ‘Issue of debentures for consideration other than cash’. The debentures may be issued at par, premium or discount.

Q.5 What is meant by ‘Issue of debentures at discount and redeemable at premium’?

Ans.

In this debentures are issued at discount and repayable at premium. For example, debenture of face value of ₹100, issued at price of ₹95, but on the date of redemption the debentureholder will get ₹105.

Q.6 What is ‘Capital Reserve’?

Ans.

A reserve created out of capital profits is Capital Reserve. It is not created out of the profits earned in the normal course of business. Capital reserve may be created out of profit on sale of fixed assets, profit on revaluation of assets and liabilities etc.

Q.7 What is meant by an ‘Irredeemable Debenture’?

Ans.

In such debentures the company does not give any undertaking for the repayment of money borrowed by issuing such debentures. These debentures are repayable on the winding up of the company.

Q.8 What is a ‘Convertible Debenture’?

Ans.

Debentures which are convertible into equity shares or in any other security either at the option of the company or the debentureholders are called ‘Convertible Debenture’.

Q.9 What is meant by ‘Mortgaged Debentures’?

Ans.

Mortgage debentures are debentures in which the loan is secured against a company’s fixed assets. In a mortgage debenture specific funds or property are pledged as security.

Q.10 What is discount on issue of debentures?

Ans.

When a debenture is issued at a price below its nominal value. It is said to be issued at discount. For example, the issue of ₹100 debenture at ₹95, ₹5 being the amount of discount.

Q.11 What is meant by ‘Premium on Redemption of Debentures’?

Ans.

Premium on redemption of debentures means discharge of liability on account of debentures by the repayment made to the debenture holders at a premium (higher than the nominal value).

Q.12 How debentures are different from shares? Give two points.

Ans.

Q.13 Name the head under which ‘discount on issue of debentures’ appears in the balance sheet of a company.

Ans.

The portion of discount on issue of debentures to be written off within 12 months is shown under the head ‘Other Current Assets’. The portion to be written off after 12 months is shown under the head ‘Other Non-current Assets’.

Q.14 What is meant by Redemption of Debentures?

Ans.

Redemption of debentures refers to discharging the liability on account of debentures in accordance with the terms of the issue. In other words, redemption of debentures means repayment of the amount of debentures by the company.

Q.15 Can the company purchase its own debentures?

Ans.

Yes, a company can purchase its own debentures for the purpose of cancellation. Such an act of purchasing and cancelling the debentures constitutes redemption of debentures by purchase in the open market.

Q.16 What is meant by redemption of debentures by conversion?

Ans.

A company can redeem its debentures by converting them into shares. If the debentureholders finds the offer is beneficial to them, they can exercise their right of converting their debentures into shares.

Q.17 How would you deal with ‘Premium on redemption of debentures’?

Ans.

Premium on redemption of debentures is credited at the time of issue of debentures. It is debited at the time of redemption of debentures with premium on redemption.

Q.18 What is meant by redemption out of capital?

Ans.

Redemption out of capital implies no profits are set aside for redemption of debentures. In such a case no profits are transferred to Debenture Redemption Reserve.

Q.19 What is meant by redemption of debentures by purchase in the open market?

Ans.

When a company purchases its own debentures in the open market for the purpose of immediate cancellation, the purchase and cancellation of such debentures are termed as redemption by purchase in the open market.

Q.20 Under which head is the Debenture Redemption Reserve shown in the Balance Sheet?

Ans.

Debenture redemption reserve is shown under the main head Shareholders’ Funds and sub-head Reserves and Surplus in the Equity and Liabilities part of the Balance Sheet.

Q.21 Explain the different types of debentures.

Ans.

A company may issue different kinds of debentures which can be classified as follows:

From the point of view of Security:

(1) Secured debentures: It refers to those debentures where a charge is created on the assets of the company for the purpose of payment in case of default.

(2) Unsecured debentures: These debentures do not have a specific charge on the assets of the company.

From the point of view of Tenure:

(1) Redeemable debentures: Debentures which are payable on the expiry of the specific period either in lump sum or in installments during the life of the company.

(2) Irredeemable debentures: In case of these debentures the company does not give any undertaking for the repayment of money borrowed by issuing such debentures.

From the point of view of Convertibility:

(1) Convertible debentures: These are the debentures which are convertible into equity shares or in any other security either at the option of the company or debentureholders.

(2) Non-Convertible debentures: These are the debentures which cannot convertible into equity shares or in any other security.

From the point of view of Coupon rate:

(1) Specific coupon rate debentures: These debentures are issued with a specified rate of interest. The specified rate may either be fixed or floating. The floating rate is usually tagged with the bank rate.

(2) Zero coupon rate debentures: These debentures do not carry any interest. In order compensate the investors such debentures are issued at substantial discount and difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

From the point of view of Registration:

(1) Registered debentures: These are the debentures in respect of which all details including names, addresses and particulars of holding of the debenture holders are entered in a register kept by the company.

(2) Bearer debentures: The record of such debentures is not available with the company and bearer debentures are transferred by mere delivery. Interest on debentures is paid to a person who produces the interest coupon attached to such debentures.

Q.22 Distinguish between a debenture and a share. Why debenture is known as loan capital. Explain.

Ans.

Debenture represents debt capital as it is an acknowledgement of debt by the company, which carries specified rate of interest, normally are secured against the assets of the company and are repayable as per the terms of the issue.

Q.23 Describe the meaning of ‘Debentures issued as a collateral securities’. What accounting treatment is given to the issue of debentures in the books of accounts?

Ans.

A collateral security may be defined as a subsidiary security or additional security besides the primary security when a company obtains a loan or overdraft from bank or any other financial institutions. It may pledge or mortgage some assets as a secured loan against the said loan. But the lending institutions may insist on additional assets as collateral security so that the amount of loan can be realised in full with the help of collateral security in case the amount from the sale of principal security falls short of the loan money. In such situation, the company may issue its own debentures to the lenders in addition to some assets already pledged. Such an issue of debentures is known as ‘Debentures issued as Collateral Security’.

Debentures issued as a collateral security can be dealt in two ways in the books of accounts of the company.

First method:

No entry is made in the books of accounts since no liability is created by such issue. However, on the liability side of the Balance Sheet, below the items of the loan a note to the effect that it has been secured by issue of debentures as a collateral security is appended. For example, 300, 12% debentures of ₹100 each as a collateral security to a bank which has advanced a loan of ₹25,000 to the company for a period of 5 years. This fact may be shown in the Balance Sheet as under:

Balance Sheet (Extract)

Notes to Accounts:

Second method: The issue of debentures as a collateral security may be recorded by means of journal entry as follows:

At the time of issue of debentures as collateral security:

Balance Sheet (Extract)

Notes to Accounts:

At the time of cancellation of debentures issued as collateral security (after repayment of loan amount):

Q.24 Explain the different terms for the issue of debentures with reference to their redemption.

Ans.

When a company issues debentures, it usually mentions the terms on which they will be redeemed on their maturity. Depending upon the terms and conditions of issue and redemption of debentures, the following six situations are commonly found in practice:

(i) Issued at par, redeemable at par

(ii) Issued at discount, redeemable at par

(iii) Issued at premium, redeemable at par

(iv) Issued at par, redeemable at premium

(v) Issued at discount, redeemable at premium

(vi) Issued at premium, redeemable at premium

(i) Issued at par, redeemable at par: In this case debenture of face value of ₹100, issued at ₹100 and repayable at ₹100.

(ii) Issued at discount, redeemable at par: In this case debenture of face value of ₹100, issued at ₹90 and repayable at ₹100.

(iii) Issued at premium, redeemable at par: In this case debenture of face value of ₹100, issued at ₹110 and repayable at ₹100.

(iv) Issued at par, redeemable at premium: In this case debenture of face value of ₹100, issued at ₹100 and repayable at ₹110.

(v) Issued at discount, redeemable at premium: In this case debenture of face value of ₹100, issued at ₹90 and repayable at ₹110.

(vi) Issued at premium, redeemable at premium: In this case debenture of face value of ₹100, issued at ₹105 (or ₹110) and repayable at ₹110 (or ₹105).

Q.25 Differentiate between redemption of debentures out of capital and out of profits.

Ans.

1. Redemption of debentures out of capital: When before or at the time of redemption profits are neither required by law nor otherwise transferred to DRR, such redemption is said to be out of capital. Section 73 of the Companies Act, 2013 restricts redemption of debentures out of capital by requiring every company (except All India Financial Institutions and Banking Companies) to create Debenture Redemption Reserve out of profits available for dividends.

2. Redemption of Debentures out of Profits: It implies adequate amount of profits are transferred to Debenture Redemption Reserve out of profit available for dividend. According to section 71(4) of the Companies Act 2013, company requires creating a debenture redemption reserve account out of profits of the company available for payment of dividend and the balance in debenture redemption reserve account shall be utilised for the purpose of redemption of debentures only. The company is required to transfer at least 25% of the value of debentures to DRR before the redemption of debentures.

Q.26 Explain the guidelines of SEBI for creating DRR.

Ans.

SEBI Guidelines for redemption of debentures:

1. The creation of Debenture Redemption Reserve (i.e., DRR) is obligatory only for non-convertible debentures and non-convertible portion of partly convertible debentures.
2. A company shall create DRR equivalent to at least 25% of the amount of debentures issued before starting the redemption of debentures.

Hence, a Company cannot redeem its debentures purely out of capital. Atleast 25% of debentures issued must be redeemed out of profits by creating a ‘Debenture Redemption Reserve’ and the balance of debentures issued may be redeemed out of profits and out of capital.

Q.27 Describe the steps for creating Sinking Fund for redemption of debentures.

Ans.

The steps involved in the working of sinking fund method are:

1. Calculate the amount of profit to be set aside annually with the help of sinking fund table.
2. Set aside the amount of profit at the end of each year and credit to Debenture Redemption Fund (DRF) account.
3. Purchase the investments of the equivalent amount at the end of first year and debit Debenture Redemption Fund Investment (DRFI) Account.
4. Receive interest on investment at the end of each subsequent year.
5. Purchase the investments equivalent to the fixed amount of profit set aside and the interest earned every year except last year (i.e. year of redemption).
6. Receive interest on investment for the last year.
7. Set aside the fixed amount of profit for the last year.
8. Encash the investments at the end of the year of redemption.
9. Transfer the profit/loss on sale of investments reflected in the balance of Debenture Redemption Fund Investment Account to Debenture Redemption Fund Account.
10. Make payment to debentureholders
11. Transfer Debenture Redemption Fund Account balance to General Reserve.

Note: Presently sinking fund method of redemption of debentures is not in CBSE syllabus.

Q.28 Can a company purchase its own debentures in the open market? Explain.

Ans.

Yes a company can purchase its own debentures for the purpose of cancellation. Such an act of purchasing and cancelling the debentures constitutes redemption of debentures by purchase in the open market. The advantage of such an option is that a company can redeem the debentures at its convenience, whenever it has surplus funds. Secondly, the company can purchase them when they are available in market at a discount.

When debentures are redeemed by purchasing them in the open market

Journal Entries

(i) When out of profits

(ii) When out of capitals

Presently conversion of debentures is not in CBSE syllabus.

Q.29 What is meant by Conversion of debentures? Describe the method of such a conversion.

Ans.

A company can redeem its debentures by converting them into shares or new class of debentures. If the debentureholders find that the offer is beneficial for them, they can exercise their right of converting their debentures into shares or new class of debentures. These new debentures (or shares) can be issued at par, at a discount or at a premium. It should be noted that only actual proceeds of debentures are to be taken into account for ascertaining the number of shares to be issued in lieu of the debentures to be converted. If debentures were originally issued at discount, the actual amount realised from them at the time of issue would be used as the basis for computing the actual number of shares to be issued. It may be remembered that this method is applicable only to convertible debentures.

Q.30

G. Ltd. a listed company issued 75,00,000, 6% debentures of ₹50 each at par payable ₹15 on application and ₹35 on allotment, redeemable at par after 7 years from the date of issue of debentures.
Record necessary entries in the books of Company.

Ans.

Journal Entries

Q.31

Y. Ltd. issued 2,000, 6% debentures of ₹100 each payable as follows: ₹25 on application; ₹50 on allotment and ₹25 on first and final call. Record necessary entries in the books of the company.

Ans.

Journal Entries

Q.32

A. Ltd. issued 10,000, 10% debentures of ₹100 each at a premium of 5% payable as follows:

₹10 on application;

₹20 along with premium on allotment and balance on first and final call.

The Debentures were fully Subscribed and all money was duly received.

Record necessary journal entries and also show how the amount will appear in the balance sheet.

Ans.

Journal Entries

Balance Sheet (Extract)

Notes to Accounts:

Q.33  T. Ltd. offered 2,00,000, 8% debenture of ₹500 each on June 30, 2014 at a premium of 10% payable as ₹200 on application (including premium) and balance on allotment, redeemable at par after 8 years. But applications are received for 3,00,000 debentures and the allotment is made on pro-rata basis. All the money due on application and allotment is received.

Record necessary entries regarding issue of debentures.

Ans.

Journal Entries

Q.34 A. Ltd. issued 90,00,000, 9% debenture of ₹50 each at a discount of 8%, redeemable at par any time after 9 years.
Record necessary entries in the books of A. Ltd for issue of debentures.

Ans.

Journal Entries

Q.35 X. Ltd. invites application for the issue of 10,000, 14% debentures of ₹100 each payable as to ₹20 on application, ₹60 on allotment and the balance on call. The company receives applications for 13,500 debentures, out of which applications for 8,000 debentures are allotted in full, applications for 5000 debentures was allotted 40% of received application, and the remaining applications were rejected.
The surplus money on partially allotted applications is utilised towards allotment.
All the sums due are duly received. Record necessary journal entries regarding issue of debentures.

Ans.

Journal Entries

Q.36 R. Ltd. offered 20,00,000, 10% debentures of ₹200 each at a discount of 7% redeemable at premium of 8% after 9 years. Record necessary entries in the books of R. Ltd.

Ans.

Journal Entries

Q.37 M. Ltd. took over assets of ₹9,00,00,000 and liabilities of ₹70,00,000 of S. Ltd. and issued 8% debentures of ₹100 each.

Record necessary entries in the books of M. Ltd.

Ans.

Journal Entries

Q.38 B. Ltd. purchased assets of the book value of ₹4,00,000 and took over the liability of ₹50,000 from Mohan Bros. It was agreed that the purchase considerations settled at ₹3,80,000, be paid by issuing debentures of ₹100 each.

What journal entries will be made in the following three cases? If debentures are issued:
(a) at par;
(b) at discount 10%
(c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.

Ans.

\begin{array}{l}\text{Number of debentures to be issued at par}\\ \text{=}\frac{\text{3,80,000}}{\text{100}}\text{= 3,800 debentures}\end{array}

Case (b)

Journal Entries

Case (c)

Journal Entries

\begin{array}{l}\text{Number of debentures to be issued at 10\% premium}\\ \text{=}\frac{\text{3,80,000}}{\text{110}}\text{= 3,454 debentures}\end{array}

Q.39 . Ltd. purchased a machinery from Y Ltd. at an agreed purchase consideration of ₹4,40,000 to be satisfied by the issue of 12% debentures of ₹100 each at a premium of ₹10 per debenture. Journalise the transactions.

Ans.

Journal Entries

\begin{array}{l}\text{Number of debentures to be issued at 10\% premium}\\ \text{=}\frac{\text{4,40,000}}{\text{110}}\text{= 4,000 debentures}\end{array}

Q.40 X. Ltd. issued 15,000, 10% debentures of ₹100 each. Give journal entries and present it in the balance sheet in each of the following cases:

1. The debentures are issued at a premium of 10%.
2. The debentures are issued at a discount of 5%;
3. The debentures are issued as a collateral security to bank against a loan of ₹12,00,000; and
4. The debentures are issued to a supplier of machinery costing ₹13,50,000.

Ans.

Case (i)

Journal Entries

Balance Sheet (Extract)

Notes to Accounts:

Case (ii)
Journal Entries

Balance Sheet (Extract)

Notes to Accounts:

Case (iii)

Balance Sheet (Extract)

Notes to Accounts:

Case (iv)

Journal Entries

Balance Sheet (Extract)

Notes to Accounts:

\begin{array}{l}\text{Price of Debentures}\\ \text{=}\frac{\text{13,50,000}}{\text{15,000}}\text{= ₹90 each}\end{array}

Q.41 Journalise the following:

1. A debenture issued at ₹95, repayable at ₹100;
2. A debenture issued at ₹95, repayable at ₹105; and
3. A debenture issued at ₹100, repayable at ₹105;

The face value of debenture in each of the above cases is ₹100.

Ans.

Journal Entries

Q.42 A listed company issues the following debentures:

1. 10,000, 12% debentures of ₹100 each at par at a discount but redeemable at premium of 5% after 5 years.
2. 10,000, 12% debentures of ₹100 each at a discount of 10% but redeemable at par after 5 years.
3. 5,000, 12% debentures of ₹1000 each at a premium of 5% but redeemable at par after 5 years.
4. 1,000, 12% debentures of ₹100 each issued to a supplier of machinery costing ₹95,000. The debentures are repayable after 5 years and
5. 300, 12% debentures of ₹100 each as a collateral security to a bank which has advanced a loan of ₹25,000 to the company for a period of 5 years.

Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period.

Ans.

Journal Entries

Q.43 A listed company issued debentures of the face value of ₹5,00,000 at a discount of 6% on April 01, 2014. These debentures are redeemable by annual drawings of ₹1,00,000 made on March 31 each year starting from March 31, 2016.

Give journal entries for issue of debentures, writing off the discount and regarding redemption of debentures.

Ans.

Journal Entries

\begin{array}{l}\text{Amount of discount on debentures}\\ \text{=}\text{5,00,000 x}\frac{\text{6}}{\text{100}}\text{= ₹30,000}\end{array}

Q.44 A company issued 10% debentures of the face value of ₹1,20,000 at a discount of 6% on April 01, 2011. The debentures are payable by annual drawings of ₹40,000 commencing from the end of third year. How will you deal with discount on debentures?

Show the discount on debentures account in the company ledger for the period of duration of debentures. Assume accounts are closed on March 31 every year.

Ans.

\begin{array}{l}\text{Amount of discount on debentures}\\ \text{=}\text{1,20,000 x}\frac{\text{6}}{\text{100}}\text{= ₹7,200}\end{array}

Calculation of amount to be written off every year:

Q.45 B. Ltd. issued 1,000, 12% debentures of ₹100 each on April 01, 2014 at a discount of 5% redeemable at a premium of 10%.Give journal entries relating to the issue of debentures and debentures interest for the period March 31, 2015 assuming that interest is paid half-yearly on September 30 and March 31 and tax deducted at source is 10%.

Ans.

Journal Entries

Loss on issue of debentures = 5% discount on issue + 10% premium on redemption

Q.46 What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice:
(a) when debentures were issued at par with a condition to redeem them at premium;
(b) when debentures were issued at premium with a condition to redeem at par; and
(c) when debentures were issued at discount with a condition to redeem them at premium?

Ans.

Journal Entries

At the time of repayment of debentures

The issue of debentures at par, premium or discount does not affect the entry at the time of redemption of debentures.

Q.47 B. Ltd. a listed company issued debentures at 94% for ₹4,00,000 on April 01, 2011 repayable by five equal drawings of ₹80,000 each. The company prepares its final accounts on March 31 every year.
Give journal entries for issues and redemption of debentures.

Ans.

Q.48 A. Ltd. issued 50,00,000, 8% debentures of ₹100 at a discount of 6% on April 01, 2018, redeemable at premium of 4% by draw of lots as under:
20,00,000 debentures on March, 2020;
10,00,000 debentures on March, 2021;
20,00,000 debentures on March, 2022.
Record journal entries for issue of debentures. Prepare discount: loss on issue of debenture account.

Ans.

In the Books of A. Ltd.

Journal Entries

\begin{array}{l}\text{Loss on issue of debentures = 6\%}\left(\text{discount on issue}\right)\text{+}\\ \text{4\%}\left(\text{premium on redemption}\right)\text{= 10\%}\\ \text{=}\text{50,00,0000}\times \text{100}\times \frac{\text{10}}{\text{100}}\text{=}\text{ram}\text{5,00,00,000}\end{array}

Q.49 How is ‘Discount on Issue of Debentures’ treated in the books of accounts? How will you deal with the ‘discount in issue of debentures’ when the debentures are to be redeemed in instalments?

Ans.

Discount on Issue of Debentures is a capital loss to the company. It must be written off before such debentures are redeemed.

Until the discount on issue is written off, it is required to be shown as Unamortized Expenses on the Assets side of the Balance Sheet.
Payment in Installments:

Under this method, normally redemption of debenture is made in instalments on the specified date during the tenure of the debentures. The total amount of debenture liability is divided by the number of years. It is to note that the actual debentures redeemable are identified by means of drawing the requisite number of lots out of the debentures outstanding for payment.

Q.50 Jay Kay Ltd. another listed company’ issued 60,000 12% debentures of Rs. 100 each at par redeemable at the end of 5 years at a premium of 20%. On this date, there existed a balance of Rs.5,00,000 in securities premium reserve account. The company created the required amount of debenture redemption reserve in 3 equal instalments on March 31, 2017, 2018 and 2019. It invested in specified securities (DRI) the required amount on April,01 of the financial year Debentures were duly redeemed on the record necessary Journal entries for:
(i) Issue of debentures
(ii) Writing off loss on issue of debentures.
(iii) Interest and debentures for 2015-16 assuring if is paid annually & tax deducted at service is 10%.
(iv) Regarding redemption of debentures.

Ans.

Q.51 Madhur Ltd. has outstanding 9% debentures of Rs. 50,00,000 redeemable at par on January 01, 2020. Debenture Redemption Reserve of Rs.2,00,000 on March 31, 2018 and balance of required amount of DRR was created on March 31, 2019. The company invested in specified securities (DRI) the required amount on April 01, 2019. Debenture were redeemed on the due date. Record necessary journal entries in the books of the company and also prepare the ledger accounts (ignore interest).

Ans.

In the Books of Madhur Ltd.

Q.52

Ans.

Q.53 X Ltd. has outstanding 20,000 12% debentures of Rs.100 each redeemable on June 30, 2019. Record necessary journal entries at the time of redemption.

Ans.

Q.54 XYZ Ltd. Issued 60,000, 12% Debentures of Rs.50 each on April 1, 2014. Interest on these debenture is payable annually 31 March each year. You are required to pass journal entries at the time of issue and redemption of debentures in the books of the company under the following cases:
(i) Debentures are issued at par and redeemable at par.
(ii) Debentures are issued at premium of 10% and redeemable at par.
(iii) Debentures are issued at a discount of 10% and redeemable at par.
(iv) Debentures are issued at par but redeemable at a premium of 10%.
(v) Debenture are issued at a premium of 10% and redeemable at premium of 10%.
(vi) Debentures are issued at discount of 10% and redeemable at a premium of 10%.

Ans.

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Q.55 A. Ltd. issued 4,000, 9% debentures of ₹100 each on the following terms:
₹20 on Application;
₹20 on Allotment;
₹30 on First call; and
₹30 on Final call.
The public applied for 4,800 debentures. Applications for 3,600 debentures were accepted in full. Applications for 800 Debentures were allotted 400 debentures and applications for 400 Debentures were rejected all money called and duly received. Record necessary journal entries.

Ans.

Journal Entries