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8.8 Double Entry Book Keeping (Section A)—ISC XII

BALANCE SHEET (EXTRACT)
as at 31st March, 2019
Particulars Note No. `
I. EQUITY AND LIABILITIES
Shareholders’ Funds
Reserves and Surplus 1 30,000

Note to Accounts

Particulars ` `
1. Reserves and Surplus
Securities Premium Reserve 10,000
Less: Loss on Issue of Debentures Written off 10,000 ...
Surplus, i.e., Balance in Statement of Profit and Loss (` 50,000 – ` 20,000) 30,000
30,000

Illustration 7.
Mayur Ltd. issued 5,000; 9% Debentures of ` 100 each at par and obtained a loan of ` 8,00,000
from bank, which is collaterally secured by ` 10,00,000; 9% Debentures of ` 100 each. How are
debentures shown in the Balance Sheet of the company if the company has passed an entry for
issue of debentures as collateral security in the books?

Solution: AN EXTRACT OF BALANCE SHEET OF MAYUR LTD. as at ...
Particulars Note No. `
I. EQUITY AND LIABILITIES
Non-Current Liabilities
Long-term Borrowings 1 13,00,000

Note to Accounts
1. Long-term Borrowings `
5,000; 9% Debentures of ` 100 each 5,00,000
Bank Loan 8,00,000
10,000; 9% Debentures of ` 100 each issued as Collateral Security 10,00,000
Less: Debentures Suspense A/c 10,00,000 ...
13,00,000
Illustration 8.
Pass the Journal entries for the following:
(i) Dhoni Ltd. issued 20,000; 10% Debentures of ` 100 each at par, redeemable at par
after 5 years.
(ii) Stokes Ltd. issued 30,000; 10% Debentures of ` 100 each at a discount of 5% to be
repaid at par at the end of 5 years.
(iii) Corney Ltd. issued 10% Debentures of ` 100 each of the value ` 40,00,000 at a premium
of 5% to be redeemed at par.