Question:
Ajanta Ltd. purchased machinery worth Rs 36,00,000 from Sujata Ltd. Ajanta Ltd. paid half the amount to Sujata Ltd. through a bank draft and the balance by issuing 8 debentures of Rs 100 each at a discount of 10.
Pass the necessary journal entries in the books of Ajanta Ltd. for the above transactions.
Ajanta Ltd. purchased machinery worth Rs 36,00,000 from Sujata Ltd. Ajanta Ltd. paid half the amount to Sujata Ltd. through a bank draft and the balance by issuing 8 debentures of Rs 100 each at a discount of 10.
Pass the necessary journal entries in the books of Ajanta Ltd. for the above transactions.
Pass the necessary journal entries in the books of Ajanta Ltd. for the above transactions.
Show Hint
When settling purchase consideration by issuing debentures at a discount:
1. Calculate the issue price per debenture (Face Value - Discount).
2. Determine the number of debentures to be issued (Amount Due / Issue Price).
3. In the journal entry, Debit the Vendor with the amount settled, Debit 'Discount on Issue of Debentures' with the total discount, and Credit 'Debentures A/c' with the total face value.
Updated On: Feb 14, 2026
Hide Solution
Verified By Collegedunia
Solution and Explanation
Here are the journal entries in the books of Ajanta Ltd:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 1. | Machinery A/c | 36,00,000 | ||
| To Sujata Ltd. | 36,00,000 | |||
| (Purchased machinery from Sujata Ltd.) | ||||
| 2. | Sujata Ltd. | 36,00,000 | ||
| To Bank A/c | 18,00,000 | |||
| To 8% Debentures A/c | 16,20,000 | |||
| To Discount on issue of debentures | 1,80,000 | |||
| (Payment to Sujata Ltd. Half by bank, balance by issuing debentures at 10% discount) | ||||
Calculations:
- Amount paid via bank draft: ₹36,00,000 / 2 = ₹18,00,000
- Amount to be settled by debentures: ₹36,00,000 / 2 = ₹18,00,000
- Face value per debenture: ₹100
- Discount per debenture: ₹100 * 10% = ₹10
- Issue price per debenture: ₹100 - ₹10 = ₹90
- Number of Debentures to be issued: ₹18,00,000 / ₹90 = 20,000 Debentures
- Total Face Value of Debentures Issued: 20,000 * ₹100 = ₹20,00,000
- Discount on Issue of Debentures: 20,000 * ₹10 = ₹2,00,000
In the second journal entry, ₹16,20,000 the amount paid has been calculated as
20,000 * 81 = 16,20,000
The Discount will be = 20,000 * 9 = 180,000
Explanation:
- Entry 1: Records the purchase of machinery from Sujata Ltd., creating a liability.
- Entry 2: Records the settlement of the liability to Sujata Ltd. Half is paid through a bank draft (decreasing the bank balance), and the remaining half is settled by issuing 8% debentures at a discount. The discount on the issue of debentures is debited to reflect the reduction in the cash received from the debenture issue. I have calculated the discount and 8% amount again for correct balance of amount.
Was this answer helpful?
5
0
Top Questions on Debentures
- Define redemption of debentures. Explain any two methods of redemption.
- A company took a loan of ₹10,00,000 at 12% p.a. and offered ₹15,00,000 in 8% Debentures as collateral security. Calculate the finance cost for the year.
- G.S. Rai company ltd. purchased assets of the book value of Rs. 98,000 from another firm. It was agreed that purchase consideration be paid by issuing 11% debentures of Rs. 100 each. Assume debentures have been issued at discount of 20%. Identify the number of debentures issued by the company to the vendor:
- CUET (UG) - 2025
- Accountancy
- Debentures
- VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on issue of debentures account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was___.
- Pass necessary journal entries for issue of debentures for the following transactions:
(i) Kiero Ltd. issued 80,000, 9% debentures of ₹ 100 each at par, redeemable at a premium of 10%.
(ii) Naro Ltd. issued 50,000, 10% debentures of ₹ 100 each at a premium of 5%, redeemable at a premium of 10%.
View More Questions
Questions Asked in CBSE CLASS XII exam
- Find the general solution of the differential equation \[ y\log y\,\frac{dx}{dy}+x=\frac{2}{y}. \]
- CBSE CLASS XII - 2026
- Differential Equations
- A square loop of side 0.50 m is placed in a uniform magnetic field of 0.4 T perpendicular to the plane of the loop. The loop is rotated through an angle of 60° in 0.2 s. The value of emf induced in the loop will be:
- CBSE CLASS XII - 2026
- Electromagnetic induction
A racing track is built around an elliptical ground whose equation is given by \[ 9x^2 + 16y^2 = 144 \] The width of the track is \(3\) m as shown. Based on the given information answer the following:
(i) Express \(y\) as a function of \(x\) from the given equation of ellipse.
(ii) Integrate the function obtained in (i) with respect to \(x\).
(iii)(a) Find the area of the region enclosed within the elliptical ground excluding the track using integration.
OR
(iii)(b) Write the coordinates of the points \(P\) and \(Q\) where the outer edge of the track cuts \(x\)-axis and \(y\)-axis in first quadrant and find the area of triangle formed by points \(P,O,Q\).
- CBSE CLASS XII - 2026
- Integration
- Consider a cylindrical conductor of length \( l \) and area of cross-section \( A \). Current \( I \) is maintained in the conductor and electrons drift with velocity \( \vec{v}_d \, (|\vec{v}_d| = \frac{eE}{m} \tau) \), where symbols have their usual meanings. Show that the conductivity of the material of the conductor is given by \[ \sigma = \frac{n e^2 \tau}{m}. \]
- CBSE CLASS XII - 2026
- Current Density
- The painting Hazrat Nizamuddin Auliya and Amir Khusro belongs to which sub-school of Deccan Miniature?
- CBSE CLASS XII - 2026
- Indian Miniature Paintings and Museums
View More Questions