Tag: company accounts part - 2 (accounting for debentures)

Questions Related to company accounts part - 2 (accounting for debentures)

How many debentures will a company be required to issue for satisfying the purchase considerations of $Rs. 28,80,000$ if the debenture is of $Rs. 80$ and is issued at a premium of $Rs. 10$ per debenture?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. $Rs. 28,800$

  2. $Rs. 30,800$

  3. $Rs. 32,200$

  4. $Rs. 32,000$

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Correct Option: D

Calculating the amount of profit to be set aside annually with the help of sinking fund table, is the ____ step involved in the working of sinking fund method.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. first

  2. second

  3. third

  4. fourth

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Correct Option: A

When debentures are issued at discount. Such discount_________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. May be written off against revenue profits

  2. May be written of against capital profit

  3. Both a & b

  4. Shown at debit side of balance sheet

Show answer
Correct Option: C

Interest is paid to the person who produces the interest coupon attached to debenture in case of -

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Bearer Debentures

  2. Registered Debentures

  3. All types of Debentures

  4. None of these

Show answer
Correct Option: A
Explanation:

Option A is correct.

The debentures which are payable to bearer and whose names do not appear in the register of debenture holders are known as “Bearer Debentures”. Coupons for interest are attached to the document and interest is paid to the holders as it falls due. Bearer Debentures are transferably by mere delivery.

X.Ltd. issued Rs$1,00,000$ $12\%$ debentures at a discount of $6\%$ on $1st$ April repayable by five equal annual drawings of Rs$20,000$ each on $31st$ March every year. The amount of discount to be written of each year assuming that the company closes its accounts on financial year basis is-

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Rs$1,200$ each year

  2. Rs$2,000, Rs1600, Rs1,200, Rs800, Rs400$

  3. Rs$1,000$ each year

  4. None of these

Show answer
Correct Option: B

In the Balance Sheet of a company, Debenture Redemption Premium Account appears under the head:

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Share Capital

  2. Reserves & Surplus

  3. Non-Current Liabilities

  4. Current Liabilities

Show answer
Correct Option: C

A Ltd. took over the assets of Rs$6,60,000$ and liabilities of Rs$80,000$ of B Ltd. for an agreed purchase consideration of Rs$6,00,000$ payable $10\%$ in cash and the balance by the issue of $15\%$ Debentures of Rs$100$ each at $10\%$ discount.
The number of debentures to be issued is-

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. $6,600$

  2. $6,000$

  3. $5,400$

  4. $4,500$

Show answer
Correct Option: B

X Ltd issues $500, 15\%$ Debentures of Rs$100$ each on $1st$ May at a discount of $10\%$ redeemable at a premium of $5\%$ after $4$ years. Interest was payable half yearly on $30th$ June and $31st$ December. The amount of interest debited to profit & Loss Account for the year ended $31st$ March is-

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Rs$1,250$

  2. Rs$3,750$

  3. Rs$5,000$

  4. Rs$6,875$

Show answer
Correct Option: D
Explanation:

Total amount of debentures = 500*100 = Rs. 50,000
Interest at 15% for full year = Rs. 7500
Debentures issued on 1st May. So interest for 11 month from 1st May to 31st March will be debited. 
Interest for 11 Months = 7500/12*11 = Rs.6875

X Ltd. has issued $14\%$ Debentures of Rs $20,000$ at a discount of $12\%$ on April $01$ and the company pays interest half-yearly on June $30$, and December $31$ every year. On March $31$ the amount shown as "Interest accrued but not due" in the Balance Sheet will be

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Rs$70,000$ shown along with Debentures

  2. Rs$70,000$ under current liabilities

  3. Rs$1,20,000$ shown along with Debentures

  4. Rs$12,000$ under current liabilities

Show answer
Correct Option: B

X Ltd issues $500, 15\%$ Debentures of Rs$100$ each on $1st$ May at a discount of $10\%$ redeemable at a premium of $5\%$ after $4$ years. Interest was payable half yearly on $30th$ June and $31st$ December. The amount of interest paid for the year ended $31st$ March is-

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Rs$1,250$

  2. $3,750$

  3. $Rs5,000$

  4. $Rs.6,875$

Show answer
Correct Option: C