Page 7 - LN ISSUE OF DEB

• Allotment on Pro-rata basis: The directors may allot the Debentures

on pro-rata basis. For example Ram has applied for 1000 Debentures
but company has issued only 800 debentures on pro-rata basis and

money of 200 debentures will be adjusted on the allotment. (In this

case applicants do not get the full debentures applied by them)

• Combination of above two alternatives: This is combination of first
two methods where some of the excess applications are rejected by the

company and pro-rata allotment is made to the remaining applicants.

Options available in this case are :

• Some of the excess applications may be rejected

• Some applicants may get full allotment

• Some Applicants may get allotment on pro-rata basis

journal Entries at the time of Issue of Debentures :

The Process of issuing debentures is same as the issue of shares.

Debentures can also be issued at par, Premium, and Discount.
Debentures can be issued for consideration other than cash as well as

collateral security. A Company may call the lump sum amount on

application or in instalments.

When full amount is called on Application

Bank A/c Dr.

To Debenture Application & Allotment A/c

(Being Application money Received)

Debenture Application & Allotment A/c Dr.

To Debentures A/c

(Being Deb.Application money adjusted)

When full amount is called in two or More Installments