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Redemption of debentures


Savithry (Student)     21 August 2019

Savithry
Student 
 2 likes  60 points

| My Other Post

Timex Ltd  issued 1000 8% debentures of RS 100 each.give appropriate journal entries..

 1) Issued at a discount of 5% ,repayable at a premium of 10%

Journal entry

Bank a/c   dr  95000                                                     Dis on issue of debentures a/c  Dr  5000               Loss on issue of debentures a/c  dr 10000                       To 8% debentures a/c  Dr  100000                             To premium on redemption of debentures a/c dr 10000

Can anyone please explain me why loss on issue of debentures should be debited and premium on redemption should be credited ???

 

 

 

avater

yasaswi gomes   05 July 2020

yasaswi gomes

 79 likes  1443 points

View Profile | My Other Post

According to nominal accounts: debit all expenses and losses, credit all incomes and gains. 

Then when it comes to securities premium account is a:

Premium on redemption is personal account

Premium on issue of debentures is capital profits transferred to reserves.

https://educoop.com/questions/d2l1.H T M L

https://www.yourarticlelibrary.com/accounting/debentures/issue-of-debenture-at-par-premium-and-discount/46934

Since reserves are a credit, when you receive premium it is credited and when you pay premium, you debit that account. I am sorry, there is not enough info on premium account classification as personal or real account. But all Equity and capital related to shareholders is personal account while, all balance sheet items are real accounts, 

 

 

avater

yasaswi gomes   05 July 2020

yasaswi gomes

 79 likes  1443 points

View Profile | My Other Post

According to nominal accounts: debit all expenses and losses, credit all incomes and gains. 

Then when it comes to securities premium account is a:

Premium on redemption is personal account

Premium on issue of debentures is capital profits transferred to reserves.

https://educoop.com/questions/d2l1.H T M L

https://www.yourarticlelibrary.com/accounting/debentures/issue-of-debenture-at-par-premium-and-discount/46934

Since reserves are a credit, when you receive premium it is credited and when you pay premium, you debit that account. I am sorry, there is not enough info on premium account classification as personal or real account. But all Equity and capital related to shareholders is personal account while, all balance sheet items are real accounts, 

 

 


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