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On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.?
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On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 ...
Discount on Issue of Debentures Account
The discount on the issue of debentures account is a nominal account that is used to record the discount on the issue of debentures. In this case, Ravi Ltd. issued 1000 debentures of Rs 200 each at a discount of 6 percent. The debentures were repayable by annual installments of Rs 40,000 each, starting from 31st March, 2015.
Year 1: 2014-2015
In the first year, the debentures outstanding are 1000 since none of them have been repaid yet. The discount on the issue of debentures is Rs 12,000 (6% of Rs 200,000). To write off the discount over the period of debentures, Rs 12,000 should be charged to the profit and loss account each year.
Discount on Issue of Debentures Account
- Debit: Rs 12,000 (To transfer the discount to the profit and loss account)
Year 2: 2015-2016
In the second year, the debentures outstanding are 1000 - 1 = 999 since Rs 40,000 has been repaid. The discount on the issue of debentures is Rs 11,988 (6% of Rs 199,988). To write off the discount over the remaining period of debentures, Rs 11,988 should be charged to the profit and loss account.
Discount on Issue of Debentures Account
- Debit: Rs 11,988 (To transfer the discount to the profit and loss account)
Year 3: 2016-2017
In the third year, the debentures outstanding are 1000 - 2 = 998 since Rs 80,000 has been repaid. The discount on the issue of debentures is Rs 11,976 (6% of Rs 199,976). To write off the discount over the remaining period of debentures, Rs 11,976 should be charged to the profit and loss account.
Discount on Issue of Debentures Account
- Debit: Rs 11,976 (To transfer the discount to the profit and loss account)
Summary:
The discount on the issue of debentures account is written off over the period of debentures by charging each year with an amount proportionate to the debentures outstanding in that year. This ensures that the discount is allocated correctly over the repayment period and reflects the true cost of borrowing. In this case, the discount is charged to the profit and loss account each year based on the remaining debentures outstanding. This approach helps in accurately representing the financial position and performance of the company.
The discount on the issue of debentures account is a nominal account that is used to record the discount on the issue of debentures. In this case, Ravi Ltd. issued 1000 debentures of Rs 200 each at a discount of 6 percent. The debentures were repayable by annual installments of Rs 40,000 each, starting from 31st March, 2015.
Year 1: 2014-2015
In the first year, the debentures outstanding are 1000 since none of them have been repaid yet. The discount on the issue of debentures is Rs 12,000 (6% of Rs 200,000). To write off the discount over the period of debentures, Rs 12,000 should be charged to the profit and loss account each year.
Discount on Issue of Debentures Account
- Debit: Rs 12,000 (To transfer the discount to the profit and loss account)
Year 2: 2015-2016
In the second year, the debentures outstanding are 1000 - 1 = 999 since Rs 40,000 has been repaid. The discount on the issue of debentures is Rs 11,988 (6% of Rs 199,988). To write off the discount over the remaining period of debentures, Rs 11,988 should be charged to the profit and loss account.
Discount on Issue of Debentures Account
- Debit: Rs 11,988 (To transfer the discount to the profit and loss account)
Year 3: 2016-2017
In the third year, the debentures outstanding are 1000 - 2 = 998 since Rs 80,000 has been repaid. The discount on the issue of debentures is Rs 11,976 (6% of Rs 199,976). To write off the discount over the remaining period of debentures, Rs 11,976 should be charged to the profit and loss account.
Discount on Issue of Debentures Account
- Debit: Rs 11,976 (To transfer the discount to the profit and loss account)
Summary:
The discount on the issue of debentures account is written off over the period of debentures by charging each year with an amount proportionate to the debentures outstanding in that year. This ensures that the discount is allocated correctly over the repayment period and reflects the true cost of borrowing. In this case, the discount is charged to the profit and loss account each year based on the remaining debentures outstanding. This approach helps in accurately representing the financial position and performance of the company.
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On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 ...
On 1st April, 2020 Ravi Ltd. issued 1,000 14% debentures of 200 each at a discount of 69
(b) Issued at 94, repayable at 106
The debentures were repayable by annual instalments of 40,000 each, from 31st March 2021 each year. Prepare the Discount on Issue of Debentures Account in the Ledger of Ra Ltd.
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On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.?
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On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.?.
On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1st April, 2014 Ravi Ltd. Issued 1000 14 percent debentures of 200 each at a discount of 6 percent. The debentures were repayable by annual installment of rs 40000 each,from 31st March, 2015 each year. The director decided to write off discount on issue over the period of debentures in such a way as to charge each year with an amount proportionate to debentures outstanding in that year. Show the discount on issue of debentures account for 3 years in the ledger of Ravi Ltd.?.
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