Question no 03 Chapter 3 - UNIMAX Class 12 Part 2 - 2021

Question No  03 Chapter 3 - UNIMAX  Class 12 Part 2 - 2021

An infrastructure company has outstanding 30,000 5%, debenture of ₹ 100 each issued in 2016 due for redemption on March 31, 2022. It was decided to invest the required amount in investment earning 10% p.a. interest on April 30, 2021. Record necessary entries regarding redemption of debentures.

The solution of Question 03 Chapter 3 of +2 Part-2: -

Journal
Books of Infrastructure company

Date	Particulars		L.F.	Debit	Credit
2021 March 31	Surplus is statement in Profit & Loss A/c	Dr.		3,00,000
	To Debenture redemption reserve A/c				3,00,000
	(Being transfer of profit equal to 10% of the nominal value of debentures issued)
April 30	Debenture redemption investment A/c	Dr.		4,50,000
	To Bank A/c				4,50,000
	(Being investment made @ 15% of the face value of debenture to be redeemed)
2020 March 31	Bank A/c	Dr.		4,91,250
	To Debenture redemption investment A/c				4,50,000
	To Interest received A/c				41,250
	(Being investment uncashed)
March 31	Debenture A/c	Dr.		30,00,000
	To Debenture holder A/c				30,00,000
	(Being amount due to debenture holder on redemption)
March 31	Debenture holder A/c	Dr.		30,00,000
	To Bank A/c				30,00,000
	(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 on redemption of all the debenture)
March 31	Interest received A/c	Dr.		41,250
	To Statement of Profit & Loss A/c				41,250
	(Being transfer of interest on investment)

Note: As per new Guidelines infrastructure companies are also required to create debenture redemption reserve @ 10% of the face value of debentures.