Page 343 - MA-12

M.34 Management Accounting (Section B)—ISC XII

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

Note to Accounts
Particulars ` `
1. Long-term Borrowings
5,000, 9% Debentures of ` 100 each 5,00,000
Loan from ICICI Ltd. 8,00,000
(Secured by the issue of 10,000; 9% Debentures of ` 100 each as collateral security)
10,000; 9% Debentures of ` 100 each (issued as collateral security) 10,00,000
Less: Debentures Suspense Account 10,00,000 Nil
13,00,000

(b) JOURNAL OF EUROPA LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
Incorporation Cost A/c ...Dr. 2,00,000
To Promoters’ A/c 2,00,000
(Being the incorporation cost)
Promoters’ A/c ...Dr. 2,00,000
To 10% Debentures A/c 2,00,000
(Being 2,000; 10% Debentures of ` 100 each issued at par)
Underwriting Commission A/c ...Dr. 1,00,000
To Underwriters’ A/c 1,00,000
(Being the underwriting commission due)
Underwriters’ A/c ...Dr. 1,00,000
To 10% Debentures A/c 1,00,000
(Being 1,000; 10% Debentures of ` 100 each issued at par)

(c) (i) JOURNAL OF MILTON LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 90,000
To Debentures Application and Allotment A/c 90,000
(Being the debentures application money received)
Debentures Application and Allotment A/c ...Dr. 90,000
Loss on Issue of Debentures A/c* ...Dr. 15,000
To 10% Debentures A/c 1,00,000
To Premium on Redemption of Debentures A/c 5,000
(Being 1,000; 10% Debentures issued at a discount of 10% and
redeemable at a premium of 5%)
Statement of Profit and Loss (Finance Cost) ...Dr. 15,000
To Loss on Issue of Debentures A/c 15,000
(Being the Loss on issue of Debentures written off from Statement
of Profit and Loss)
* Loss on Issue of Debentures = ` 10,000 (Discount on Issue) + ` 5,000 (Premium on Redemption) = ` 15,000.