Company Accounts

Debentures

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ABC Industries Ltd. issued 2,000, 10% Debentures of Rs.100 each, at a premium of Rs. 10 per debenture payable as follows: On application Rs. 50 On allotment Rs. 60 The debentures were fully subscribed, and all money was duly received. The amount of long-term borrowings on the balance sheet will be

2,00,000

1,00,000

1,20,000

2,20,000

✅ Correct Option: 1

Given Information:

Number of debentures issued = 2,000
Face value per debenture = Rs. 100
Premium per debenture = Rs. 10
Issue price per debenture = Rs. 100 + Rs. 10 = Rs. 110

Journal Entries:

On Application:

Particulars	Dr (Rs.)	Cr (Rs.)
Bank A/c Dr.	1,00,000
To Debenture Application A/c		1,00,000
(Application money received @ Rs. 50 on 2,000 debentures)

On Allotment:

Particulars	Dr (Rs.)	Cr (Rs.)
Debenture Application A/c Dr.	1,00,000
Bank A/c Dr.	1,20,000
To 10% Debentures A/c		2,00,000
To Securities Premium Reserve A/c		20,000
(Allotment money received @ Rs. 60 on 2,000 debentures including premium of Rs. 10 per debenture)

Long-term borrowings in the Balance Sheet represent the actual liability towards debenture holders, which is recorded at face value only.

Face Value of Debentures = 2,000 × Rs. 100 = Rs. 2,00,000

The premium of Rs. 20,000 (2,000 × Rs. 10) is shown separately under Securities Premium Reserve in the Shareholders' Funds section, not as part of borrowings.

Therefore, the amount of long-term borrowings = Rs. 2,00,000

2025: 24 May Shift 1

Match List-I with List-II

List-I	List-II
Type of Debenture	Meaning
(A) Redeemable Debenture	(I) Payable on the expiry of the specific period either in lump sum or in installments during the lifetime of the company.
(B) Perpetual Debenture	(II) Company does not give any undertaking for the repayment of money borrowed by issuing such debentures.
(C) Specific Coupon Rate Debenture	(III) Issued with a specified rate of interest, which is called the coupon rate.
(D) Bearer Debenture	(IV) Can be transferred by way of delivery and the company does not keep any record of the debenture.

Choose the correct answer from the options given below:

2025: 30 May Shift 1

Match List-I with List-II

List-I	List-II
(A) These debentures refer to those debentures where a charge is created on the assets of the company for the purpose of payment in case of default.	(I) Bearer Debentures
(B) These debentures are those which are payable on the expiry of the specific period either in lump sum or in installments during the lifetime of the company.	(II) Zero Coupon Rate Debentures
(C) These debentures do not carry a specific rate of interest.	(III) Redeemable Debentures
(D) These debentures are the debentures which can be transferred by way of delivery and the company does not keep any record of the debentures interest on the debentures that is paid to a person who produces the interest coupon attached to such debentures.	(IV) Secured Debentures

Choose the correct answer from the options given below:

2025: 31 May Shift 1

Debentures which are transferable by mere delivery are:

2026: 24 May Shift 1

Depending upon the terms and conditions of issue and redemption of debentures, which of the following situation is not found in practice?

2025: 30 May Shift 2

A company has issued 10% Debentures of Face Value of Rs. 5,00,000 as Collateral Security against Rs. 6,00,000, 12% Bank Loan. What amount of total interest will be paid by company for the whole year:-

2022: 15 July Shift 2

When the number of Debentures applied for is more than the number of debentures offered to public, the issue is said to be:

ABC Industries Ltd. issued 2,000, 10% Debentures of Rs.100 each, at a premium of Rs. 10 per debenture payable as follows: On application Rs. 50 On allotment Rs. 60 The debentures were fully subscribed, and all money was duly received. The amount of long-term borrowings on the balance sheet will be

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