Question 19 Chapter 10 of +2-A - T.S. Grewal 12 Class

Question 19 Chapter 10 of +2-A

19. Hp Ltd. has 1,00,000;8% Debentures of 50 each due for redemption in five equal annual installments starting from 30th June, 2015. Debentures Redemption Reserve has a balance of 5,00,000 on that date . Pass journal entries.

 

The solution of Question 19 Chapter 10 of +2-A: - 

 

Date	Particulars		L.F.	Debit	Credit
2015
Mar.01	Statement of Profit and Loss	Dr		7,50,000
	To Debenture Redemption Reserve				7,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investments made in specified securities @15)
June 30	Debenture holders’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2016
Apr. 30	Debenture Redemption Investment A/c	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in securities equal to 15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holder s’A/c				10,00,000
	(Being Debentures due for redemption)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holder s’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2017
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		5,00,000
	To Debenture holders’ A/c				5,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holders’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2018
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holder s’ A/c				10,00,000
	(Being Debenture due for redemption)
June 30	Debenture holder s’ A/c	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Amount of debentures paid to debenture holders)
June 30	Bank A/c	Dr		10,00,000
	To Debenture Redemption Investment A/c				10,00,000
	(Being Investment made in securities, Owen cashed)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve A/c				2,50,000
	(Being DRR amount is transferred to General Reserve )
2019
Apr. 30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holders’ A/c				10,00,000
	(Being Amount of debentures paid to debenture holders)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holders’ A/c	Dr
	To Bank A/c
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve A/c				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)

 

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs dated11.02.2013, every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen per cent of the number of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entry for investment in Government securities has been passed a year before the first redemption year.
**Since nothing is specified, investments will be encased before debentures are redeemed.

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

• T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

  • Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
  • Chapter No. 3 - Goodwill: Nature and Valuation
  • Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 - Admission of a Partner
  • Chapter No. 6 - Retirement/Death of a Partner
  • Chapter No. 7 - Dissolution of a Partnership Firm

  T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 8 - Company Accounts -  Accounting for Share Capital
  • Chapter No. 9 - Company Accounts - Issue of Debentures
  • Chapter No. 10 - Redemption of Debentures

  T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 1 - Financial Statements of a Company
  • Chapter No. 2 - Financial Statement Analysis 
  • Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
  • Chapter No. 4 - Accounting Ratios
  • Chapter No. 5 - Cash Flow Statement

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