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I. Pass necessary… (Class 12 Accountancy SQP 2026-27, Q23)

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AccountancyCBSE Class 12 · Sample paper, session 2026-27 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2026-27: question 23

From the official CBSE sample question paper for 2026-27, section A, question 23, for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q23 · 6 marks · Long answerIssue and Redemption of Debentures

I. Pass necessary journal entries for 'Issue of Debentures' in the following cases:
a) Arman Ltd. issued 750, 12% Debentures of ₹100 each at a discount of 10% redeemable at a premium of 5%
b) Sohan Ltd. issued 800, 9% Debentures of ₹100 each at a premium of 20 per debenture redeemable at a premium of ₹10 per Debenture.

II. X Ltd. obtained a loan of ₹4,00,000 from "The Development Bank". The company issued 5,000; 9%. Debentures of ₹100 each as a collateral security for the same. As per the policy the company effects these transactions through journal. Show journal entries and prepare the extract of balance sheet.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2026-27.

Hints

Open one hint at a time and try again before the next.

Hint 1

Premium payable on redemption is always a loss on issue.

Hint 2

When collateral debentures are journalised, a Debenture Suspense account is debited.

Hint 3

In the Balance Sheet the suspense account is deducted from the debentures.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. I (a) Arman Ltd.: issue price ₹ 90; discount ₹ 7,500 and premium on redemption ₹ 3,750 (a loss on issue).

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.67,500
    To Debenture Application and Allotment A/c67,500
    (Being application money on 12% debentures received)
    Debenture Application and Allotment A/c Dr.67,500
    Discount on Issue of Debentures A/c Dr.7,500
    Loss on Issue of Debentures A/c Dr.3,750
    To 12% Debentures A/c75,000
    To Premium on Redemption of Debentures A/c3,750
    (Being debentures issued at 10% discount, redeemable at 5% premium)
    2 marks

  2. I (b) Sohan Ltd.: issue price ₹ 120; premium on issue ₹ 16,000; premium on redemption ₹ 8,000 is a loss on issue.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.96,000
    To Debenture Application and Allotment A/c96,000
    (Being application money on 9% debentures received)
    Debenture Application and Allotment A/c Dr.96,000
    Loss on Issue of Debentures A/c Dr.8,000
    To 9% Debentures A/c80,000
    To Securities Premium A/c16,000
    To Premium on Redemption of Debentures A/c8,000
    (Being debentures issued at ₹ 20 premium, redeemable at ₹ 10 premium)
    2 marks

  3. II. Collateral debentures recorded through the journal:

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.4,00,000
    To Bank Loan A/c4,00,000
    (Being loan raised from The Development Bank)
    Debenture Suspense A/c Dr.5,00,000
    To 9% Debentures A/c5,00,000
    (Being debentures issued as collateral security)

    Balance Sheet (extract): Non-current Liabilities, Long-term Borrowings (Note 1) ₹ 4,00,000.

    Note 1 — 9% Debentures ₹ 5,00,000, less Debenture Suspense ₹ 5,00,000 = nil; Bank Loan (secured by collateral debentures) ₹ 4,00,000. Total ₹ 4,00,000.

    2 marks

Answer: (a) Discount ₹ 7,500 and Loss ₹ 3,750 Dr. with application ₹ 67,500 to 12% Debentures ₹ 75,000 and Premium on Redemption ₹ 3,750; (b) Loss ₹ 8,000 and application ₹ 96,000 to 9% Debentures ₹ 80,000, Securities Premium ₹ 16,000 and Premium on Redemption ₹ 8,000; II Bank Loan ₹ 4,00,000 and Debenture Suspense ₹ 5,00,000 entries; long-term borrowings ₹ 4,00,000

Where the marks are

  • Entries for Arman Ltd. (2 marks)
  • Entries for Sohan Ltd. (2 marks)
  • Collateral entries and Balance Sheet extract (2 marks)

Revise the chapter

Practise this chapterBoard-style questions from Issue and Redemption of Debentures, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2026-27: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.