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Sometimes while obtaining loans the company issues debentures as collateral security. It
is nothing but a additional security. However such debentures are issued completely on
temporary basis and the bankers refund the debentures whenever the loan is repaid.
However if the loan is not repaid then the bank keeps it with himself and such issue
becomes permanent. It can be recorded in the books of company by following 2
methods.
d) Debenture refunded:-
Debenture a/c. ….. Dr.
To debenture suspense a/c.
c) Loan refunded:-
No entry
NOTES
Discount on Reissue
1. If the shares are originally not issued at discount i.e. originally issued at par or
at premium; then reissue can have never a discount entry.
2. Discount will find a place on reissue only when shares are originally at
discount.
3. The reissue discount can nevertheless be more then the originally discount but
can be equal or less than the originally discount or nil as per the situation
requires.
Ex. 1. If the shares are originally issued at 10 cr. Rs.12, they are forfeited and
reissued at 20% discount then discount will not find a place.
2. If shares of Rs.10 % issued at Rs.1 discount and forfeited.
Situation:-