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Question No 01 Chapter 3 - UNIMAX Class 12 Part 2 - 2021
‘N’ Ltd. (an unlisted company) issued 10,000, 6% debentures of ₹ 100 each at a premium of 5% on 1st April 2019 redeemable on 31st March 2022. The issue was fully subscribed. Debentures to be redeemed towards debenture redemption investment on 30th April 2021.
Record necessary entries for issue and redemption of debentures.
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| 2019 | |||||
| April 1 | Bank A/c | Dr. | 10,50,000 | ||
| To Debenture application & allotment A/c | 10,50,000 | ||||
| (Being receipt of application money) | |||||
| April 1 | Debenture Application & Allotment A/c | Dr. | 10,50,000 | ||
| To Debenture A/c | 10,00,000 | ||||
| To Securities premium reserve A/c | 50,000 | ||||
| (Being application money transferred) | |||||
| 2021 March 31 | Surplus statement of Profit & Loss A/c | Dr. | 1,00,000 | ||
| To Debentures redemption reserve A/c | 1,00,000 | ||||
| (Being transfer of profit equity to 10% of the nominal value of debenture issued) | |||||
| April 30 | Debenture redemption investment A/c | Dr. | 1,50,000 | ||
| To Bank A/c | 1,50,000 | ||||
| (Being investment made @ 15% of the face value of debenture to be redeemed) | |||||
| 2020 March 31 | Bank A/c | Dr. | 1,50,000 | ||
| To Debenture redemption investment A/c | 1,50,000 | ||||
| (Being investment uncashed) | |||||
| March 31 | Debenture A/c | Dr. | 10,00,000 | ||
| To Debenture holder A/c | 10,00,000 | ||||
| (Being amount due on redemption) | |||||
| March 31 | Debenture holder A/c | Dr. | 10,00,000 | ||
| To Bank A/c | 10,00,000 | ||||
| (Being payment of amount due to debenture holder) | |||||
| March 31 | Debenture redemption reserve A/c | Dr. | 1,00,000 | ||
| To General reserve A/c | 1,00,000 | ||||
| (Being transfer of debenture redemption reserve A/c to general reserve A/c on redemption) | |||||
Note: (1) DRR will be created on 31st March of the previous year.
(2) Minimum investment of 15% will be made on or before 30th April of the year in which debenture are to be redeemed and the same will be in cashed at the time redemption of debentures.
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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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