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Question No 11 Chapter 3 - UNIMAX Class 12 Part 2 - 2021
Tala Power Ltd. (an unlisted company) issued 40,000, 7% debenture of ₹ 100 each on July 1,2017 redeemable at premium of 5% as under:
| On March 31,2020 | 16,000 Debentures |
| On March 31, 2021 | 16,000 Debentures |
| On March 31,2022 | 8,000 Debentures |
It was decided to transfer Debenture Redemption Reserve ₹ 1,00,000 on March 31,2018; ₹ 2,00,000 on March 31,2019 and balance on March 31,2020. Record necessary journal entries ignoring interest.
(amount transfer to DRR on march 31,2020- ₹ 1,00,000 and the balance of this account transfer to General Reserve ₹ 4,00,000)
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| 2017 | |||||
| Bank A/c | Dr. | 40,00,000 | |||
| To Debenture application & Allotment A/c | 40,00,000 | ||||
| (Being debenture application and allotment money recorded) | |||||
| July 1 | Bank A/c | Dr. | 40,00,000 | ||
| Loss on issue of debenture A/c | Dr. | 2,00,000 | |||
| To Debenture A/c | 40,00,000 | ||||
| To Premium on Redemption A/c | 2,00,000 | ||||
| (Being 40,000 7% debenture issued @ ₹ 100 each redeemable at premium of 5%) | |||||
| 2018 March 31 | Statement in Profit & Loss A/c | Dr. | 2,00,000 | ||
| To Loss on issue of Debenture A/c | 2,00,000 | ||||
| (Being loss on issue of debenture written off) | |||||
| 2018 March 31 | Surplus statement of Profit & Loss A/c | Dr. | 1,00,000 | ||
| To Debenture redemption reserve A/c | 1,00,000 | ||||
| (Being transfer of Profit & Loss DRR) | |||||
| April 30 | Debenture Redemption Investment A/c | Dr. | 2,40,000 | ||
| To Bank A/c | 2,40,000 | ||||
| (Being 15% of face value is invested) | |||||
| 2019 March 31 | Surplus i.e. Balance in P&L A/c | Dr. | 2,00,000 | ||
| To Debenture redemption reserve A/c | 2,00,000 | ||||
| (Being profit transferred to create debentures redemption reserve) | |||||
| 2020 March 31 | Surplus i.e. Balance in P&L A/c | Dr. | 1,00,000 | ||
| To Debenture redemption reserve A/c | 1,00,000 | ||||
| (Being profit transferred to create debenture redemption reserve) | |||||
| March 31 | Debentures A/c | Dr. | 16,00,000 | ||
| Premium on redemption of debenture A/c | Dr. | 80,000 | |||
| To Debenture holder A/c | 16,80,000 | ||||
| (Being amount due to debenture holder on redemption of debentures @ ₹ 100 each on 16,000 debenture and premium payable @ 5%p.a.) | |||||
| March 31 | Bank A/c | Dr. | 2,40,000 | ||
| To Debenture redemption investment A/c | 2,40,000 | ||||
| (Being investment encashed) | |||||
| March 31 | Debenture holder A/c | Dr. | 16,80,000 | ||
| To Bank A/c | 16,80,000 | ||||
| (Being payment made to debenture holder on redemption of debenture) | |||||
| March 31 | Debenture redemption investment A/c | Dr. | 1,60,000 | ||
| To General reserve A/c | 1,60,000 | ||||
| (Being transfer of proportionate amount of DRR to GR) | |||||
| Apr. 30 | Debenture Redemption Investment A/c | Dr. | 2,40,000 | ||
| To Bank A/c | 2,40,000 | ||||
| (Being 15% of face value is invested) | |||||
| 2021 March 31 | Debenture A/c | Dr. | 16,00,000 | ||
| Premium on Redemption of Debenture A/c | Dr. | 80,000 | |||
| To Debenture holder A/c | 16,80,000 | ||||
| (Being amount due to debenture holder on redemption of debenture @ ₹ 100 each on 16000 debenture and premium payable @ 5%p.a.) | |||||
| March 31 | Bank A/c | Dr. | 2,40,000 | ||
| To Debenture redemption investment A/c | 2,40,000 | ||||
| (Being investment encashed) | |||||
| March 31 | Debenture holder A/c | Dr. | 16,80,000 | ||
| To Bank A/c | 16,80,000 | ||||
| (Being payment made to debenture holder on redemption of debenture) | |||||
| Debenture redemption investment A/c | Dr. | 1,60,000 | |||
| To General reserve A/c | 1,60,000 | ||||
| (Being transfer of proportionate amount of DRR to GR) | |||||
| Apr. 30 | Debenture Redemption Investment A/c | Dr. | 1,20,000 | ||
| To Bank A/c | 1,20,000 | ||||
| (Being 15% of face value is invested) | |||||
| 2022 March 31 | Debenture A/c | Dr. | 8,00,000 | ||
| Premium on Redemption of Debenture A/c | Dr. | 40,000 | |||
| To Debenture holder A/c | 8,40,000 | ||||
| (Being amount due to debenture holder on redemption of debenture @ ₹ 100 each on 8000 debenture and premium payable @ 5%p.a.) | |||||
| March 31 | Bank A/c | Dr. | 1,20,000 | ||
| To Debenture redemption investment A/c | 1,20,000 | ||||
| (Being investment encashed) | |||||
| Debenture holder A/c | Dr. | 8,40,000 | |||
| To Bank A/c | 8,40,000 | ||||
| (Being payment made to debenture holder on redemption of debenture) | |||||
| March 31 | Debenture Redemption Reserve A/c | Dr. | 80,000 | ||
| To General reserve A/c | 80,000 | ||||
| (Being transfer of Proportionate amount of DRR to GR) | |||||
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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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