Yogadatra Ltd. (pharmaceutical company) appointed marketing expert,
Mr. Kartikay as the CEO of the company, with a target to penetrate their
roots in the rural regions. Mr. kartikay discussed the ways and means to
achieve target of the company with financial, production and marketing
departmental heads and asked the finance manager to prepare the
budget. After reviewing the suggestions given by all the departmental
heads, the finance manager proposed requirement of an additional fund
Yogadatra Ltd. is a zero-debt company. To avail the benefits of financial
leverage, the finance manager proposed to include debt in the capital
structure. After deliberations, on April1,2020, the board of directors had
decided to issue 6% Debentures of ₹100 each to the public at a premium
of 5%, redeemable after 5 years at ₹110 per share.
You are required to answer the following questions:
(i) Calculate the number of debentures to be issued to raise additional
(ii) Pass Journal entry for the allotment of debentures.
(iii)Pass Journal entry to write off loss on issue of debentures.
(iv)Calculate the amount of annual fixed obligation associated with
(v) Prepare Loss on Issue of Debentures Account.
(i) Number of Debentures to be issued = 52,50,000/105 = 50,000
(ii) In the Books of Yogadatra Ltd.