Issue of Debentures: Problem Solving and Journal Entries

This video tutorial focuses on the issuance and accounting treatment of debentures, particularly when issued at a discount. It explains the journal entries required for debenture transactions, including application, allotment, and calls. The session highlights the similarities between the accounting treatment for debentures and shares, emphasizing the importance of naming debentures due to varying interest rates. The tutorial concludes with a preview of the next session on debenture redemption.

What is the primary focus of the session on debentures?

• Interest calculation on debentures

• Redemption of debentures

• Problem-solving and journal entries

• Introduction to debentures

How are debentures issued at a discount calculated?

• By adding the face value and discount

• By dividing the face value by the discount rate

• By multiplying the face value by the discount rate

• By subtracting the discount from the face value

What is the significance of naming debentures like '8% debenture'?

• To indicate the maturity period

• To specify the interest rate and differentiate between debentures

• To denote the issuing company

• To highlight the face value

Which account is debited when cash is received for debenture allotment?

• Bank Account

• Debenture Application Account

• Debenture Capital Account

• Interest Account

What happens to the amount in the debenture application account after allotment?

• It is transferred to the debenture capital account

• It is refunded to the applicants

• It remains in the application account

• It is used to pay interest

What is the main difference between accounting for shares and debentures?

• The interest rate

• The terminology used in journal entries

• The issuing process

• The face value

What will the upcoming session focus on?

• Redemption of debentures

• Interest calculation

• Issuance of debentures

• Journal entries for shares