Libra Limited recently made a public issue in respect of which the following information is available: (a) No. of partly convertible debentures…

CA Foundation · Accounting · MTP · June 2024
Libra Limited recently made a public issue in respect of which the following information is available: (a) No. of partly convertible debentures issued-2,00,000; face value and issue price 100 per debenture. (b) Convertible portion per debenture-60%, date of conversion- on expiry of 6 months from the date of closing of issue. (c) Date of closure of subscription lists-1.5.20X 1, date of allotment-1.6.20X 1, rate of interest on debenture-15% payable from the date of allotment, value of equity share for the purpose of conversion-60 (Face Value - 10). (d) Underwriting Commission-2%. (e) No. of debentures applied for-1,50,000. (f) Interest payable on debentures half-yearly on 30th September and 31st March. Write relevant journal entries for all transactions arising out of the above during the year ended 31st March,20X 2 (including cash and bank entries).

Suggested Answer and Working Notes:

Journal Entries Date Particulars Dr. Amount Rs. Cr. Amount Rs. 1.5.2020 Bank A/c Dr. To Debenture Application A/c (Application money received on debentures @100 each) 1,50,00,000 1,50,00,000 1.6.2020 Debenture Application A/c Dr. Underwriters A/c Dr. To 15% Debentures A/c (Allotment of1,50,000 debentures to applicants and - 50,000 debentures to underwriters) 1,50,00,000 50,00,000 2,00,00,000 Underwriting Commission Dr. To Underwriters A/c (Commission payable to underwriters @2% on 2,00,00,000) 4,00,000 4,00,000 Bank A/c Dr. To Underwriters A/c (Amount received from underwriters in settlement of account) 46,00,000 46,00,000 01.06.2020 Debenture Redemption Investment A/c Dr. To Bank A/c (₹ 200,000 X 100 x 15% X 40%) (Being Investments made for redemption purpose) 12,00,000 12,00,000 30.9.2020 Debenture Interest A/c Dr. To Bank A/c (Interest paid on debentures for4 months @15% on 2,00,00,000) 10,00,000 10,00,000 31.10.2020 15% Debentures A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Conversion of60% of debentures into shares of 60each with a face value of 10) 1,20,00,000 20,00,000 1,00,00,000 31.3.2021 Debenture Interest A/c Dr. To Bank A/c (Interest paid on debentures for the half year) (Refer working note below) 7,50,000 7,50,000 Working Note: Calculation of Debenture Interest for the half year ended 31st March, 2021: On 80,00,000 for6 months @15% = 6,00,000 On 1,20,00,000 for1 months @15% = 1,50,000 7,50,000

Topics: Financial Statements of Not-for-Profit Organisations

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