Bharat Ltd. had an authorized capital of Rs.20,00,000 divided into Rs.2,00,000 equity shares of Rs.10 each. The company issued 1,00,000 shares and the dividend paid for shares was Rs.2 for the year ended 31-3-2008. The management of the company decided to export its products to the neighbouring countries Nepal, Bhutan, Sri Lanka and Bangladesh. To meet the requirement of additional funds the financial manger of the company put up the following three alternatives before its Board of Directors:
(v) Issue 54,000 equity shares.
(w) Obtain a loan from Import and Export Bank of India. The loan was available at 12% per annum interest. To issue 9% debentures at a discount of 10%. After comparing the available alternatives the company decided on 1-4-2008 to issue 6,000 9% debentures of Rs.100 each at a discount of 10%. These debentures were redeemable in four installments starting from the end of third year. The amount of debentures to be redeemed at the end of third, fourth, fifth and sixth year was as follows:
| Year |
Profit |
| III |
1,00,000 |
| IV |
1,00,000 |
| V |
2,00,000 |
| VI |
2,00,000 |
Prepare 9% debentures account for the yeas 2008-09 to 2013-14.
