Question 21 Chapter 10 of +2-A - T.S. Grewal 12 Class

Question 21 Chapter 10 of +2-A

21. Tata Motors Ltd. issued 40,000;7% Debentures of 100 each on 1st July 2009 redeemable at a premium of 5% as under:

On 31st March 2015	16,000 Debentures
On 31st March 2016	16,000 Debentures
On 31st March 2017	8,000 Debentures

It was decided to transfer amount out of profit to Debentures Redemption Reserve 2,00,000 on 31st March 2012; 4,00,000 on 31st March 2013 and balance on 31st March 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realis them after the last redemption. Pass journal entries ignoring interest.

 

The solution of Question 21 Chapter 10 of +2-A: - 

 

Date	Particulars		L.F.	Debit	Credit
2009
Jul.01	Bank A/c	Dr		40,00,000
	To Debenture Application A/c				40,00,000
	(Being Debenture application money received)
	Debenture Application A/c	Dr		40,00,000
	Loss on Issue of Debentures A/c	Dr		2,00,000
	To 7% Debentures A/c				40,00,000
	To Premium on Redemption A/c				2,00,000
	(Being Application money transfer to Debenture capital)
2012
Mar.31	Statement of Profit and Loss	Dr		2,00,000
	To Debenture Redemption Reserve A/c				2,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2013
Mar. 31	Statement of Profit and Loss	Dr		45,000
	To Debenture Redemption Reserve A/c				45,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
	Debenture holders’ A/c	Dr		4,00,000
	To Bank A/c				4,00,000
	(Being Payment made to debenture holders)
2014
Mar.31	Statement of Profit and Loss	Dr		4,00,000
	To Debenture Redemption Reserve A/c				4,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2015
Mar. 30	7% Debenture A/c	Dr		16,00,000
	Premium on Redemption A/C	Dr		80,000
	To Debenture holders’ A/c				16,80,000
	(Being DRI encased)
Mar. 31	Debenture holder s’ A/c	Dr		16,80,000
	To Bank A/c				16,80,000
	(Being Payment made to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		4,00,000
	To General Reserve				4,00,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
Apr. 30	Debenture Redemption Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Investment is made in specified securities@15)
2016
Mar . 31	7% Debenture A/c	Dr		16,00,000
	Premium on Redemption of Debentures A/c	Dr		80,000
	To Debenture holders				16,80,000
	(Being DRI encased)
Mar. 31	Debenture holders’ A/c	Dr		16,80,000
	To Bank A/c				16,80,000
	(Being Payment made to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		4,00,000
	To General Reserve A/c				4,00,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
Apr. 30	Debenture Redemption Investment A/c	Dr		1,20,000
	To Bank A/c				1,20,000
	(Being Investment is made in specified securities@15)
2017
Mar. 31	7% Debenture A/c	Dr		8,00,000
	Premium on Redemption of Debentures A/c	Dr		40,000
	To Debenture holders				8,40,000
	(Being DRI encased)
Mar. 31	Debenture holders’ A/c	Dr		8,40,000
	To Bank A/c				8,40,000
	(Being Payment made to debenture holders)
Mar. 31	Bank A/c	Dr		4,00,000
	To Debenture Redemption Investment A/c				4,00,000
	(Being Investment made in securities, noncached)
Apr. 30	Debenture Redemption Investment A/c	Dr		1,20,000
	To General Reserve A/c				1,20,000
	(Being Debenture Redemption Reserve transferred to General Reserve)

 

 

Amount for DRR(25% of Debenture issued)=	40,00, 000X	25
		100
	=Rs 10, 00,000 Less: Amount transferred in 2012

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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

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