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M.340 An Aid to Accountancy—CBSE XII

7. First Method (When Journal entry is not passed):

Note to Accounts
Particulars `
1. Long-term Borrowings
Loan from IDBI Bank 4,00,000
(Secured by issue of 5,000; 9% Debentures of ` 100 each as Collateral Security)
Second Method (When Journal entry is passed):

Note to Accounts
Particulars `
1. Long-term Borrowings
Loan from IDBI Bank 4,00,000
5,000; 9% Debentures of ` 100 each issued as Collateral Security 5,00,000
Less: Debentures Suspense A/c 5,00,000 ...
4,00,000
Or
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 25,00,000
To Debentures Application A/c 25,00,000
(Being the application money received for 5,000 debentures @ ` 500 each)
Debentures Application A/c ...Dr. 25,00,000
To 10% Debentures A/c 25,00,000
(Being the allotment of 5,000; 10% Debentures of ` 1,000 each)
Debentures Allotment A/c ...Dr. 20,00,000
Loss on Issue of Debentures A/c ...Dr. 7,50,000
To 10% Debentures A/c 25,00,000
To Premium on Redemption of Debentures A/c 2,50,000
(Being the allotment money due)
Bank A/c ...Dr. 20,00,000
To Debentures Allotment A/c 20,00,000
(Being the allotment money received)
8. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
A’s Capital A/c ...Dr. 20,000
B’s Capital A/c ...Dr. 12,000
C’s Capital A/c ...Dr. 8,000
To Goodwill A/c 40,000
(Being existing Goodwill written off)
B’s Capital A/c ...Dr. 3,000
C’s Capital A/c ...Dr. 12,000
To A’s Capital A/c 15,000
(Being A’s sacrificed share of Goodwill debited to B’s and C’s Capital Accounts
in their gaining ratio)
5 1 4
Note: Gain/Sacrifice: A’s Sacrifice = ; B’s Gain = ; and C’s Gain = . Gaining Ratio = 1 : 4.
30 30 30