NCERT Books Solutions for Class 12 Accountancy Chapter 7 Issue and Redemption of debentures
NCERT Solutions offer a broad variety of definitions and introduction to the topic for Class 12 Accounts, which includes all the questions provided in the NCERT books.
NCERT Solutions for Class 12 Accountancy Chapter 7 Issue and Redemption of debentures is known as an extremely helpful resource for preparing for the exam. Takshila Learning provides a huge number of NCERT problems and solutions for Redemption of Debentures for Class 12 NCERT solutions to its students. CBSE Class 12 Accountancy NCERT Solutions are created by subject matter experts to ensure that students are prepared for a successful grade. The CBSE guidelines were followed when creating the questions in the NCERT Books.
Issue and Redemption of Debentures Class 12 NCERT Solutions provide us with all-inclusive information on all concepts. Since students in class 12 must learn the fundamentals of the topic, this class 12 programme is a detailed study guide that clearly explains the concepts. At any time, you can access and use the direct links for Class 12 NCERT Solutions by Chapter. The NCERT Solutions for 12th Grade Accounts use a step-by-step approach to clarify the principles, making them easy to understand.
NCERT Solutions for Class 12 Accounts include all of the questions contained in the NCERT books, as well as a variety of meanings and introductions to the topic.
Questions Covered In NCERT solutions for class 12 Accountancy Redemption of debentures
Question 1 : What is meant by a Debenture?
Question 2 : What does a Bearer Debenture mean?
Question 3 : State the meaning of ‘Debentures issued as a Collateral Security’.
Question 4 : What is meant by ‘Issue of debentures for Consideration other than Cash’?
Question 5 : What is meant by ‘Issue of debenture at discount and redeemable at premium?
Question 6 : What is ‘Capital Reserve’?
Question 7 : What is meant by an ‘Irredeemable Debenture’?
Question 8 : What is a ‘Convertible Debenture’?
Question 9 : What is meant by ‘Mortgaged Debentures’?
Question 10 : What is discount on issue of debentures?
Question 11 : What is meant by ‘Premium on Redemption of Debentures’?
Question 12 : How are debentures different from shares? Give two points.
Question 13 : Name the head under which ‘discount on issue of debentures’ appears in the Balance Sheet of a company.
Question 14 : What is meant by redemption of debentures?
Question 15 : Can the company purchase its own debentures?
Question 16 : What is meant by redemption of debentures by conversion?
Question 17 : How would you deal with ‘Premium on Redemption of Debentures’?
Question 18 : What is meant by ‘Redemption out of Capital?
Question 19 : What is meant by redemption of debentures by ‘Purchase in the Open Market’?
Question 20 : Under which head is the ‘Debenture Redemption Reserve’ shown in the Balance Sheet?
Question 21 : Explain the different types of debentures?
Question 22 : Distinguish between a debenture and a share. Why is debenture known as loan capital? Explain.
Question 23 : Describe the meaning of ‘Debenture Issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?
Question 24 : 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?
Question 25 : Explain the different terms for the issue of debentures with reference to their redemption.
Question 26 : Differentiate between redemption of debentures out of capital and out of profits.
Question 27 : Explain the guidelines of SEBI for creating Debenture Redemption Reserve.
Question 28 : Describe the steps for creating Sinking Fund for redemption of debentures.
Question 29 : Can a company purchase its own debentures in the open market? Explain.
Question 30 : What is meant by conversion of debentures? Describe the method of such a conversion.
Question 31 : G.Ltd. issued 75,00,000, 6% Debenture of Rs 50 each at par payable Rs 15 on application and Rs 35 on allotment, redeemable at par after 7 years from the date of issue of debenture. Record necessary entries in the books of Company.
Question 32 : Y.Ltd. issued 2,000, 6% Debentures of Rs 100 each payable as follows: Rs 25 on application; Rs 50 on allotment and Rs 25 on First and Final call.
Question 33 : A.Ltd. issued 10,000, 10% Debentures of Rs 100 each at a premium of 5% payable as follows:
Rs 10 on Application;
Rs 20 along with premium on allotment and balance on First and Final call. Record necessary Journal Entries.
Question 34 : A. Ltd. issued 90,00,000, 9% Debenture of Rs 50 each at a discount of 8%, redeemable at par any time after 9 years. Record necessary entries in the books of A. Ltd.
Question 35 : A. Ltd. issued 4,000, 9% Debentures of Rs 100 each on the following terms:
Rs 20 on Application;
Rs 20 on Allotment;
Rs 30 on First call; and
Rs 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.
Question 36 : T. Ltd. offered 2,00,000, 8% debenture of Rs 500 each on June 30, 2014 at a premium of 10% payable as Rs 200 on application (including premium) and balance on allotment, redeemable at par after 8 years. But application 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
Question 37 : X.Ltd. invites application for the issue of 10,000, 14% debentures of Rs 100 each payable as to Rs 20 on application, Rs 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, 5,000 only 40% and the remaining rejected. The surplus money on partially allotted applications is utilised towards allotment. All the sums due are duly received.
Question 38 : R.Ltd. offered 20,00,000, 10% Debenture of Rs 200 each at a discount of 7% redeemable at premium of 8% after 9 years. Record necessary entries in the books of R. Ltd.
Question 39 : M.Ltd. took over assets of Rs 9,00,00,000 and liabilities of Rs 70,00,000 of S.Ltd. and issued 8%Debenture of Rs 100 each. Record necessary entries in the books of M. Ltd.
Question 40 : B.Ltd. purchased assets of the book value of Rs 4,00,000 and took over the liability of Rs 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs,3,80,000, be paid by issuing debentures of Rs 100 each.
What Journal entries will be made in the following three cases, if debentures are issued: (a) at par; (b) at discount; (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.
Question 41 : X.Ltd. purchased a Machinery from Y for an agreed purchase consideration of Rs 4,40,000 to be satisfied by the issue of 12% debentures of Rs 100 each at a premium of Rs 10 per debenture. Journalise the transactions.
Question 42 : X.Ltd. issued 15,000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:
(i) The debentures are issued at a premium of 10%;
(ii) The debentures are issued at a discount of 5%;
(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12,00,000; and
(iv) The debentures are issued to a supplier of machinery costing Rs 13,50,000.
Question 43 : Journalise the following:
(i) A debenture issued at Rs 95, repayable at Rs 100;
(ii) A debenture issued at Rs 95, repayable at Rs 105; and
(iii) A debenture issued at Rs 100, repayable at Rs 105;
The face value of debenture in each of the above cases is Rs 100.
Question 44 : A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under:
20,00,000 Debentures on March, 2011
10,00,000 Debentures on March, 2013
20,00,000 Debentures on March, 2014
Compute the amount of discount to be written-off in each year till debentures are paid. Also prepare discount/loss on issue of debenture account.
Question 45 : A company issues the following debentures:
(i) 10,000, 12% debentures of Rs 100 each at par but redeemable at premium of 5% after 5 years;
(ii) 10,000, 12% debentures of Rs 100 each at a discount of 10% but redeemable at par after 5 years;
(iii) 5,000, 12% debentures of Rs 1,000 each at a premium of 5% but redeemable at par after 5 years;
(iv) 1,000, 12% debentures of Rs 100 each issued to a supplier of machinery costing Rs 95,000. The debentures are repayable after 5 years; and
(v) 300, 12% debentures of Rs 100 each as a collateral security to a bank which has advanced a loan of Rs 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.
Question 46 : A company issued debentures of the face value of Rs 5,00,000 at a discount of 6% on April 01, 2012. These debentures are redeemable by annual drawings of Rs,1,00,000 made on March 31 each year. The directors decided to write off discount based on the debentures outstanding each year.
Calculate the amount of discount to be written-off each year. Give journal entries also.
Question 47 : A company issued 10% Debentures of the face value of Rs,1,20,000 at a discount of 6% on April 01, 2011. The debentures are payable by annual drawings of Rs 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.
Question 48 : B. Ltd. issued debentures at 94% for Rs 4,00,000 on April 01, 2011 repayable by five equal drawings of Rs 80,000 each. The company prepares its final accounts on March 31 every year.
Indicate the amount of discount to be written-off every accounting year assuming that the company decides to write-off the debentures discount during the life of debentures. (Amount to be written-off: 2012 Rs 8,000; 2013 Rs 6,400; 2014 Rs 4,800; 2015 Rs 2,000; 2016 Rs 1,600).
Question 49 : B. Ltd. issued 1,000, 12% debentures of Rs 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 ending March 31, 2015 assuming that interest is paid half yearly on September 30 and March 31 and tax deducted at source is 10%.
Question 50 : 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 that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?
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Questions And Answers For NCERT Solutions for Class 12 Accountancy Chapter 7 Issue and Redemption of debentures
1) What is meant by a Debenture?
Answer: “Debt” is derived from the Latin word “debere,” which means “to borrow.” Debentures aren’t secured in any way. These are issued by governments and businesses to raise funds or capital for long-term borrowing.
2) What is the meaning of a Bearer Debenture?
Answer: Bearer Debentures are debentures in which no papers relating to the debenture or its holders are held and the debenture may be exchanged by execution. These debentures are payable to the debenture bearer and are written on paper. They’re also known as unregistered debentures.
3) Explain what “Debentures issued as a Collateral Security” means.
Answer: Collateral security is an additional layer of protection on top of the primary security. When a corporation takes out a loan from a financial institution, debentures are often issued as additional protection or collateral coverage. The money lender will not receive any interest on these debentures. Debentures are used to cover the debt if the company fails to make payments and the primary security is insufficient to cover the loan.
4) What is meant by ‘Issue of debentures for Consideration other than Cash’?
Answer: Instead of paying cash, a company purchases any commodity from its vendors or suppliers and issues debentures to them. This is referred to as a debenture problem for non-cash consideration. It benefits both the seller and the buyer because the seller receives interest on the debentures given and the buyer does not have to arrange cash right away. Debentures may be purchased at face value, at a premium, or at a discount.
5) What is meant by ‘Issue of debenture at discount and redeemable at premium?
Answer: Due to difficult market conditions, a company can need to raise funds from the market by selling debentures at a discount to their par value and offering redeemable values higher than the par value to draw investor interest; this is known as problem of debenture at discount and redeemable at premium. The difference created as a result of such an agreement is regarded as a loss on debenture issuance.
6) What is ‘Capital Reserve’?
Answer: Capital Reserve is a reserve that is generated from capital gains, which are profits earned from operations other than usual business activities. Profits from reissuing debentures, premiums on share and debenture issues, benefit redemption on debenture, profits from the selling of fixed assets, and so on are examples of such activities. These can be used to issue bonus shares but cannot be used for paying dividend. The capital reserve is used to meet future capital losses.
7) What is meant by an ‘Irredeemable Debenture’?
Answer: Irredeemable debentures are those that cannot be redeemed by a corporation during its lifetime. These debentures are only redeemable when the business is wound up. Because of their infinite life span, they are also known as eternal debentures. In India, these types of debentures are not provided.
8) What is a ‘Convertible Debenture’?
Answer: Convertible Debentures are debt instruments that can be exchanged into equity shares after a set period of time. When the debentures are released, the period when they can be converted to equity shares is specified. There are two kinds of them:
- Partially convertible debentures: Only a portion of the debenture can be converted into equity securities.
- Fully convertible debentures: In this case, all of the debentures are fully convertible.
9) What is meant by ‘Mortgaged Debentures’?
Answer: Mortgaged debentures are debt instruments that are backed by a company’s asset or assets. Stable debentures are another name for these. There are two kinds of them:
- Fixed Charge Debentures: Debentures secured against a particular asset or the computer business.
- Floating Charge: Debentures that are protected against all of a company’s properties.
10) What is discount on issue of debentures?
Answer: Debentures that are issued at a discount are those that are sold for less than their face value (nominal value). There are no restrictions on companies issuing discounted debentures.
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