The word debenture has been derived from a latin word debere which means to borrow. Jul 01, 2019 ts grewal accountancy class 12 solutions chapter 10 redemption of debentures. Corporate accounting 9 issue of shares at premium shares are said to be issued at premium when a shareholder is required to pay more than the face value to the company. Bonds refer to a way of making a loan to a company or government agency. Cbse class 12 accountancy accounting for share capital and. Show the journal entries and the balance sheet of the company. The company can issue following types of debentures. The aforesaid information provided as a service to investors and. Ts grewal accountancy class 12 solutions chapter 9 issue of. A company can reissue the forfeited shares in accordance with the provisions contained in the. Forfetire and reissue of shares 3 understand the concept and accounting treatment of callinarrears and callinadvance. Ts grewal accountancy class 12 solutions chapter 9 issue of debentures.
Cbse test papers class 12 accountancy accounting for debentures. A company can re issue the forfeited shares in accordance with the provisions contained in the. The concepts should be clear which will help in faster learning. Accounting entries for issue of debentures capital. Dividend are preferred by cautious investors who are reluctant. In the balance sheet of a company, the discount on debentures shows a debit balance of rs 15,000. The subject company accounts and auditing practices is very important for the students. Dividend are issued to meet long term and medium term financial requirements 2. This would be the second share issue of the company.
Generally equity shares are preferred by adventurous investors with risk bearing capacity dividend. Issue of debenture by unlisted company and listed company. A debenture is a type of bond thats not secured by any asset. Shares may be further subdivided into different types, as follows. They are traded in everyday stock market and the value of the company is decided by the value of the shares at the end of the day. The following are some of the differences between equity shares and debentures. Convertible debentures either wholly or partly nonconvertible. If a company goes bankrupt, different security holders will be paid with different priority. Accounting for share capital 1 national council of. The procedure of issuing debentures by a company is similar to the one followed while issuing equity stocks.
A limited company issued 25,000 ordinary shares of rs. The excess amount received over the face value is called share premium. Victoria, british columbia, may 31, 2017 filing services canada via comtex erin ventures to issue common shares in satisfaction of interest payment to convertible debenture holders. A debenture is the traditional name given to a loan agreement where the borrower is a company. Business purchase and underwriting, profit prior and post incorporation. The interest that is paid to debenture holders is calculated as a charge against profit in the company s financial statements. Journalise the entry for re issue of shares whether at discount or at premium. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares. The debentures were fully subscribed and the money due duly received. If a company employs a capital stock registrar andor transfer agent, the registrar or agent, or both, should be requested to confirm directly to the auditors the number of shares of each class of stock. The interest that is paid to debenture holders is calculated as a charge against profit in the companys financial statements.
Deal with the forfeiture of shares issued with different conditions. In the course of his work, a company secretary is expected to have the working knowledge of company accounts. Debenture is a written instrument acknowledging a debt under the common seal of the company. Typically, a debenture will set out the terms of the loan. Subscriptions are payable as to rs 20,000 on application and balance on allotment. Convertible bonds or bonds that can be converted into equity shares of the issuing company after a predetermined period of time. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Need checklist on issue of compulsorily convertible debentures. If there is more than one series of debentures in the series, then file with the roc particulars of the date and amount of each issue along with the eform no 10. Shares can be broadly divided into two categories equity and preference sh. Each share forms a unit of ownership of a company and is offered for sale so as to raise capital for the company.
Preference, or preferred shares give owners preferential dividend payments and equity rights in liquidation. The ts grewal solutions to the questions after every unit of ts grewal textbooks aimed at helping students solving difficult questions. Information on the share and debentures issues was as follows. May 31, 2017 victoria, british columbia, may 31, 2017 filing services canada via comtex erin ventures to issue common shares in satisfaction of interest payment to convertible debenture holders. In january 2016, the companys board of directors decided to raise funds for an expansion project through the issue of shares and debentures. The procedure for the issue of debentures is as follows. Companies need to follow certain procedures for issue of debentures to raise money. Problem 1 issue of shares at parjournal, cash book and balance sheet.
In fpo or ipo, they generally sell their shares and debentures to the investors. B issue of debentures for consideration other than cash. Cbse class 12 accountancy issue of debentures cbse. The following is a general, although nonexhaustive, guide to the main rules and procedural steps that apply to the allotment and issue of shares in a private limited company. Cbse class 12 accountancy accounting for debentures notes. The company starts by releasing a prospectus declaring the debenture issuance. Employees stock option plan is the right granted to the employees of the company to purchases thew shares lower than the market prices. Equity shares are issued to meet long term financial requirements dividend. The issue was fully subscribed and the company allotted shares to all he applicants. Check list of issue of secured debenture by public company. Ii 2019 solutions for class 12 commerce accountancy chapter 9 issue of debentures are provided here with simple stepbystep explanations.
Journalise the transaction and show how the balance sheet will appear after the transactions have been completed. Let us make an indepth study about the allotment of shares. The shares represent ownership of the shareholders in the company. Learning summary accounting for the issue of shares varies depending on whether the shares are to be fully subscribed for or payable by instalments. The capital is contributed by the shareholders through the subscription of shares. These solutions for issue of debentures are extremely popular among class 12 commerce students for accountancy issue of debentures solutions come handy for quickly. Mar 12, 2020 preference, or preferred shares give owners preferential dividend payments and equity rights in liquidation. Ts grewal accountancy class 12 solutions chapter 10. Shares and debentures our services company law club. Such shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability. Fixed rate of dividends are paid to the preference share holder as in case.
The income earned on shares is the dividend, but the income earned on debentures is interest. Nov 19, 2018 the shares represent ownership of the shareholders in the company. A debenture is a debt security issued by a corporation or government entity that is not. Hold the extraordinary general meeting and pass a special resolution to issue debentures and increase borrowing powers of the company and to authorize the board to create the charge on the assets of the company special resolution to be passed through postal ballot or evoting by listed company as the case. To raise the capital these marketable instruments are issued by the companies. B all the issued shares of a particular class in a company are fully paid up and. Issue notices of extraordinary general meeting along with the explanatory statement.
On the other hand, debentures represent indebtedness of the company. Issue of shares at premium and discount and redeemable preference shares 58. Irredeemable or perpetual debenture holders can never force the company to redeem their debentures. Construction of references to offering shares or debentures to the public 57. Preference shares have the characteristics of both equity shares and debentures. Can someone please share the checklist and procedure involved for the issue of compulsorily convertible debentures as per the companies act 20 for a private limited company. If a company employs a capital stock registrar and or transfer agent, the registrar or agent, or both, should be requested to confirm directly to the auditors the number of shares of each class of stock. A company usually raises its capital in the form of shares called share capital and debentures debt capital. Construction of references to offering shares or debentures to the public. The preference shares are market instrument issued by the companies to raise the capital. Share capital, to record the amount called up on the issue of shares. Jul 24, 2014 8 these shares have a higher claim on the assets and earnings of the company than the equity shares.
Company debenture is one of the important sources of finance for large companies, in addition to equity stocks, bank loans, and bonds. Sebi issue and listing of debt securities regulations, 2008, sebi. Application of premiums received on issue of shares. Ts grewal accountancy class 12 solutions chapter 10 redemption of debentures. Icsi house, 22, institutional area, lodi road, new delhi 110 003. Naturally, the intending purchaser has to apply in a prescribed form given in. Victoria, british columbia, nov 30, 2017 filing services canada via comtex erin ventures to issue common shares in satisfaction of interest payment to.
This chapter deals with the accounting for share capital of companies. Download cbse class 12 accountancy accounting for debentures notes in pdf, accountancy chapter notes, class notes mind maps formulas revision notes cbse class 12 accounting for debentures. How to allot and issue new shares in a uk limited company. Every year rs 5,000 is charged off to profit and loss account. What are the guidelines and procedures for issue of. Ts grewal accountancy class 12 solutions chapter 9 issue. The terms of issue, however provided that the debentures could be redeemed by giving 6 months notice at any time after 5 years at a premium of 4% either by payment in cash or by allotment of preference shares andor other debentures according to the option of the debentureholders. However, issuing shares is a more complex procedure than the majority of people expect. Cbse chapter wise practice papers with solution for class 12 accountancy chapter accounting for debentures for free download in pdf format. Guru, you can access to ts grewal book solutions in free pdf for accountancy for class 12 so that you can refer them as and when required. Jul 01, 2019 ts grewal accountancy class 12 solutions chapter 9 issue of debentures. A prospectus is an invitation to the public to purchase shares. Cbse class 12 accountancy accounting for share capital and debenture assignment.