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Question 14 Chapter 10 of +2-Part-1
14. (Redemption in Installments) An unlisted company issued 12,000 10%. Debentures of Rs. 100 each at Rs. 98 on 1 April 2012. These are redeemable in four annual installments commencing from. 31 March, 2015. DRR was created by the company On 31st March, 2013 Rs. 50,000 and on 31 March, 2014 Rs. 50,000. The balance required as per law was created on 31 March, 2015, Journalise the transactions for the year 2012-13 to 2016-17.
Journal
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
|---|---|---|---|---|---|
| 1-4-12 | Bank A/c (12000 X 98) | Dr. | 11,76,000 | ||
| To 10% Debenture Application & Allotment A/c | 11,76,000 | ||||
| (Being app. Received for 12,000 debentures @ ₹ 98 each) | |||||
| Debenture Application & Allotment A/c | Dr. | 11,76,000 | |||
| Discount on Debenture A/c | Dr. | 24,000 | |||
| To 10 % Debenture A/c | 12,00,000 | ||||
| (Being app. Money adjusted ) | |||||
| 31-3-13 | Surplus in Statement of Profit & loss | Dr. | 50,000 | ||
| To Debenture Redemption Reserve A/c | 50,000 | ||||
| (Being DRR created to redeem debentures) | |||||
| 31-3-14 | Surplus in Statement of Profit & loss | Dr. | 1,50,000 | ||
| To Debenture Redemption Reserve A/c | 1,50,000 | ||||
| (Being DRR created to redeem debentures) | |||||
| 30-4-14 | Debenture Redemption Investment A/c | Dr. | 45,000 | ||
| To Bank A/c | 45,000 | ||||
| (Being investment made equal to @ 15% of nominal value of debentures to be redeemed on Or before April 30) | |||||
| 31-3-15 | Surplus in Statement of Profit & loss (WN) | Dr. | 1,00,000 | ||
| To Debenture Redemption Reserve A/c | 1,00,000 | ||||
| (Being DRR created to 25% of debentures to be redeemed) | |||||
| 31-3-15 | 10 % Debenture A/c | Dr. | 3,00,000 | ||
| To Bank A/c | 3,00,000 | ||||
| (Being ¼ debentures redeemed) | |||||
| 31-3-16 | 10 % Debenture A/c | Dr. | 3,00,000 | ||
| To Bank A/c | 3,00,000 | ||||
| (Being ¼ debentures redeemed) | |||||
| 31-3-17 | 10 % Debenture A/c | Dr. | 3,00,000 | ||
| To Bank A/c | 3,00,000 | ||||
| (Being ¼ debentures redeemed ) | |||||
Working Note:
| 25% of 10,00,000 | 3,00,000 |
| DRR already created (50,000+1,50,000) | 2,00,000 |
| Remaining DRR Reg. | 1,00,000 |
Note: Discount on debentures will be written off in the ratio of outstanding debentures . For which following entry will be passed each year from 2012-2017
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
| Statement of profit & loss | Dr. | ||||
| To Discount on Debenture A/c | |||||
Note: 2016-17 i.e, last years entries have not been yet asked in the question . Hence debentures worth Rs. 3,00,000 have not been shown as redeemed . Also no transfer is made of DRR to General Reserve because that is done by only after complete redemption. Also investment will be realised in the last year
It all about Question 14 Chapter 10 of +2-Part-1, If you have any problem please comment below.
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Question 14 Chapter 10 of +2-Part-1 - USHA Publication 12 Class Part - 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication +2 Part 1.
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