Definition, types and Accounting procedure

1. DEBENTURES
G.V.V.V.PRASAD BABUM.Com.,DBF(CFA),NET,(Ph.D)
Lecturer in Commerce
GOVERNMENT DEGREE COLLEGE
NARSIPATNAM

2. OBJECTIVES
MEANING OF DEBENTURES
TYPES OF DEBENTURES
ACCOUNTING PROCEDURE

3. DEFINITIONS
Latin word “debere”.
Section 2(12) of the Companies Act 1956 ..Debenture can
be in the form of a Debenture Stock, or Bonds of a
company.
E.Thomas “Debenture is a document under the
company's seal which provides for the repayment.”

4. TYPES OF DEBENTURES
SECURITY
SECURED
UNSECURED
SECOND
PERMANANCE
CHARGE
FIRST
CONVERTIBILITY
CONVERTIBLE NON-CONVERTIBLE
REDEEMABLE IRREDEEMABLE
BEARER
RECORDS
REGISTERED

5. ACCOUNTING PROCEDURE
DATE PARTICULARS DEBIT CREDIT
Bank A/c Dr
To Debenture Application A/c
WHEN APPLICATION MONEY DUE
Debenture Application A/c Dr
To Debenture A/c
TRANSFERRED TO DEBENTURE A/C:

6. :
DATE PARTICULARS DEBIT CREDIT
Debenture Allotment A/c
To Debenture A/c
MONEY DUE ON ALLOTMENT:
Bank A/c Dr
To Debenture Allotment A/c
ALLOTMENT MONEY RECEIVED

7. DATE PARTICULARS DEBIT CREDIT
Debenture First & Final Call A/c Dr
To Debenture A/c
FIRST & FINAL CALL DUE
Bank A/c Dr
ToDebenture First & Final Call A/c
CALL AMOUNT RECEIVED

8. ILLUSTRATION
PAVAN CHEMICALS Ltd. issued 2000, 6% Debentures
of Rs.100 each payable as follows: 20/- on Application,
25/- on Allotment, 55/- on First & Final Call. Show
Journal Entries when all the debentures were applied for
and allotted and no dues on payments.

9. DATE PARTICULARS Dr Cr
1 Bank A/c Dr
To Debenture Application A/c
(Application money Received)
40,000
40,000
2. Debenture Application A/c Dr
To Debenture A/c
(Transfered to Debeenture A/c)
40,000
40,000

10. 3. Debenture Allotment A/c
To Debenture A/c
(Allottment Money due)
50,000
50,000
4. Bank A/c Dr
To Debenture Allotment A/c
(Allottment Money Received)
50,000
50,000

11. 5. Debenture First & Final Call A/c Dr
To Debenture A/c
(Calls Money Due)
1,10,000
1,10,000
6. Bank A/c Dr
To Debenture First & Final Call A/c
(Calls Amount Received)
1,10,000
1,10,000

12. WHEN DEBENTURES ISSUED AT PREMIUM :
DURING ALLOTMENT
WHEN DEBENTURES ISSUED AT DISCOUNT: DURING ALLOTMENT
Debenture Allotment A/c Dr
To Debenture A/c
To Securities Premium A/c
Debenture Allotment A/c Dr
Discount on issue of Debentures A/c Dr
To Debenture A/c

13. TRICKY CASE
DEBENTURES ISSUED at Rs.90, repayable at Rs.110
https://www.123rf.com/photo_19856615_thinking-woman-with-question-marks-above-the-head-isolated-on-white-background.html

14. DATE PARTICULARS DEBIT CREDIT
ISSUE Bank A/c Dr
Discount on issue of Debentures Dr
Loss on issue of Debentures A/c Dr
To Debenture A/c
To Premium on Redemption of
Debenture A/c
90
10
10
100
10
REDEMPTION
Debenture A/c Dr
Premium on Redemption of
Debenture A/c Dr
To Debentureholders A/c
100
10
110
Debentureholders A/c Dr
To Bank A/c
110
110