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Question 29 Chapter 10 of +2-Part-1
29. (Purchase of own debentures for immediate cancellation) On 31 March 2016 A company purchased for immediate cancellation 300 12% Debentures of Rs. 100 each at Rs. 96. Interest is payable on 31 March and 30 September. Pass necessary entries. Ignore DRR & DRI.
Journal
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
|---|---|---|---|---|---|
| 2016 | |||||
| Mar. 31 | Debenture A/c | Dr. | 30,000 | ||
| Interest on Debenture A/c | Dr. | 900 | |||
| To Bank A/c | 29,700 | ||||
| To Profit on Redemption A/c | 1,200 | ||||
| (Being 300 debentures purchased @ Rs. 96 ex-interest & immediately cancelled ) | |||||
| Profit on Redemption A/c | Dr. | 1,200 | |||
| To Capital Reserve A/c | 1,200 | ||||
| (Being profit on redemption transferred to capital reserve ) | |||||
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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.
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