On 1st April, 2004 Mode Ltd. issued Rs. 4, 00,000 8% debentures of Rs. 100 each at a discount of 5% and redeemable at 10% premium after 4 years and offered the holders optionto convert their holding into equity shares of Rs. 10 each after 31st March, 2006. On 1st April,2006, 25%n holders exercised their options. Give the necessary journal entries both at the time of issue and at the time of options. Give the necessary journal entries both at the time ofconversion under the alternative cases.Case: 1 If equity shares of Rs 10 each are issued at par.Case: 2 If equity shares of Rs 10 each are a premium of Rs 2.50 per share.Case: 3 If equity shares of Rs 10 each are a discount of 95%.
On 1st April, 2004 Mode Ltd. issued Rs. 4, 00,000 8% debentures of Rs. 100 each at a discount of 5% and redeemable at 10% premium after 4 years and offered the holders optionto convert their holding into equity shares of Rs. 10 each after 31st March, 2006. On 1st April,2006, 25%n holders exercised their options. Give the necessary journal entries both at the time of issue and at the time of options. Give the necessary journal entries both at the time ofconversion under the alternative cases.Case: 1 If equity shares of Rs 10 each are issued at par.Case: 2 If equity shares of Rs 10 each are a premium of Rs 2.50 per share.Case: 3 If equity shares of Rs 10 each are a discount of 95%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 1st April, 2004 Mode Ltd. issued Rs. 4, 00,000 8% debentures of Rs. 100 each at a discount of 5% and redeemable at 10% premium after 4 years and offered the holders option
to convert their holding into equity shares of Rs. 10 each after 31st March, 2006. On 1st April,
2006, 25%n holders exercised their options. Give the necessary
conversion under the alternative cases.
Case: 1 If equity shares of Rs 10 each are issued at par.
Case: 2 If equity shares of Rs 10 each are a premium of Rs 2.50 per share.
Case: 3 If equity shares of Rs 10 each are a discount of 95%.
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