The Question : Youth Ltd. took a loan of ₹ 15,00,000 from State Bank of India against the security of tangible assets. In addition to principal security, it issued 10,000 11% debentures of ₹ 100 each as collateral security. Pass necessary journal entries for the above transactions, if the company decided to record the issue of 11% debentures as collateral security and show the presentation in the Balance Sheet of Youth Ltd.
Solution for the question :
In the Books of Youth Ltd. JournalDateParticulars L.F.Dr. Amount(₹)Cr. Amount(₹)Bank A/c Dr.15,00,000To Bank Loan A/c (Being Loan taken from State Bank of India)15,00,000Debenture Suspense A/c Dr.10,00,000To 11% Debentures A/c (Being 11% debentures deposited as collateral security)10,00,000Balance sheet of Youth Ltd. (An extract)ParticularsNote NoAmount (₹)I. Equity and Liabilities1. Non-current Liabilities Long term borrowings 115,00,000Notes to Accounts:1ParticularsAmount (₹)I. Long term borrowings Secured Loan from State Bank of India 15,00,00010,000, 11% debentures of ₹100 each10,00,000Less: – Debenture Suspense 10,00,000NIL (deposited as collateral security) 15,00,000
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