Adjust account in the Debenture in a few clicks

Aug 6th, 2022
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How to adjust account in the Debenture

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hello viewers i highly welcome all of you to ae accounting tutorials before we start make sure you click on the subscribe button on your screen okay it is very necessary and also like comment and share this video for the benefit of others today we are going to look at adjustment for final account specifically for a sole trader but then in part one of this video we look at how accruing prepayment are being treated in the final account of the sort reader basically today we are going to look at how drawings bad debts provision for doubtful debt and probably how depreciations are being treated in the final account of a soul trader okay so lets actually look at how drawings is being treated quickly drawings okay in order in order to understand this concept very well let me actually bring some small table to actually explain what this means okay so were going to look at how these items will be treated so treatment im going to look at the treatment of all these items okay so items you have

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A debenture is a type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.
Debentures are a debt instrument utilized by organizations and the government to give credit. The loan is given to corporate businesses on their reputation at a proper pace of revenue. Organizations use debentures when they need to acquire cash at a decent pace of interest for their growth.
Debenture are financial instrument which carries a certain percentage of interest. Debentures are like other debts. Interest paid on debenture is an expense and charged to profit loss account.
The interest that the company pays to its debenture holders is one of the companys day-to-day running costs and will show as such, reducing the companys profit in the profit and loss account. The amount of money that a company owes to debenture holders will be a capital account on its balance sheet.
An interest paid is an award to all the debenture holders for investing in the debentures of an enterprise. Usually, interest is paid in a periodical systematic manner at a fixed rate of interest on the face value of the debentures and is being treated as a charge on the profits.
Company does not make any journal entry in the account books at the time of issue of these debentures. A note is attached below the loan on the liabilities side of the balance sheet. It will state the fact that they have been secured by the issue of debentures.
So say if it 12% debentures, it means that the company issuing the debentures is liable to pay a fixed interest @ 12% to the debenture holders, irrespective of whether the company make a profit or a loss. A thing to be noted here is that interest will be payable at the face value always.
Receipt of Debentures first call money Amount Cr. Bank A/c Dr. To Debentures First Call A/c Cr. Note: If there is any second or final call then entries will be similar to the entries of the first call just with a change of name entry to second or final call as the case may be.

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