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Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security?
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Pass the necessary journal entries for the issue of 7% debentures in t...
Journal Entries for Issue of Debentures and Meaning of Debentures as Collateral Security
Issue of 7% Debentures with Different Terms
i. 400 debentures of Rs. 150 each issued at 10% premium redeemable at Rs. 200 per debenture:
Debenture A/c Dr. 66,000
(400 x 150)
Premium on issue of Debentures A/c Dr. 6,600
(10% of 66,000)
To Bank A/c 72,600
(Being the issue of 7% Debentures at a premium)
ii. 400 debentures of Rs. 200 issued at a discount of 10% redeemable at par:
Bank A/c Dr. 72,000
(400 x 200 x 90%)
Discount on issue of Debentures A/c Dr. 8,000
(10% of 80,000)
To Debenture A/c 80,000
(Being the issue of 7% Debentures at a discount)
Meaning of Debentures as Collateral Security
Debentures as collateral security refer to the situation where a company pledges its issued debentures as collateral or security for a loan taken from a lender. In this case, the lender receives the right to sell the debentures in the event of non-repayment of the loan by the company.
Debentures are considered a safe and secure investment option, and hence, lenders are often willing to accept them as collateral. The company issuing the debentures does not have to redeem them immediately, and the lender can hold on to the debentures until the loan is repaid.
This arrangement benefits both parties as the lender receives a secure investment option, and the company receives the necessary funds to meet its financial requirements. However, the company must ensure that it has the means to repay the loan on time, or else it risks losing ownership of the pledged debentures.
Issue of 7% Debentures with Different Terms
i. 400 debentures of Rs. 150 each issued at 10% premium redeemable at Rs. 200 per debenture:
Debenture A/c Dr. 66,000
(400 x 150)
Premium on issue of Debentures A/c Dr. 6,600
(10% of 66,000)
To Bank A/c 72,600
(Being the issue of 7% Debentures at a premium)
ii. 400 debentures of Rs. 200 issued at a discount of 10% redeemable at par:
Bank A/c Dr. 72,000
(400 x 200 x 90%)
Discount on issue of Debentures A/c Dr. 8,000
(10% of 80,000)
To Debenture A/c 80,000
(Being the issue of 7% Debentures at a discount)
Meaning of Debentures as Collateral Security
Debentures as collateral security refer to the situation where a company pledges its issued debentures as collateral or security for a loan taken from a lender. In this case, the lender receives the right to sell the debentures in the event of non-repayment of the loan by the company.
Debentures are considered a safe and secure investment option, and hence, lenders are often willing to accept them as collateral. The company issuing the debentures does not have to redeem them immediately, and the lender can hold on to the debentures until the loan is repaid.
This arrangement benefits both parties as the lender receives a secure investment option, and the company receives the necessary funds to meet its financial requirements. However, the company must ensure that it has the means to repay the loan on time, or else it risks losing ownership of the pledged debentures.
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Pass the necessary journal entries for the issue of 7% debentures in t...
Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security?
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Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security?
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Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security?.
Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Pass the necessary journal entries for the issue of 7% debentures in the following Cases. i. 400 debentures of Rs 150 each issued at 10% premium redeemable at Rs200 per debenture. ii. 400 debentures of Rs 200 issued at a discount of 10% redeemable at par. iii. What do you mean by issue of debentures as collateral security?.
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