T.S. Grewal 12 Class Book Keeping Part - A - Vol. 2 Archives

Question 22 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 4, 2020December 25, 2020 Shubham Sharma

Question 22 Chapter 10 of +2-A

22. ‘Ananya Ltd.’ had an authorized capital of 10,00,00,000 divided into 10,00,000 equity shares of 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March 2007 was 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors: |
a Issue 47,500 equity shares at a premium of 100 per share.
b Obtain a long-term loan from the bank which was available at 12% per annum.
c Issue 9% Debentures at a discount of 5%. After evaluating these alternatives, the company decided to issue 1,00,000,9% Debentures on 1st April 2008. The face value of each debenture was 100. These debentures were redeemable in four instalments starting from the end of the third year, which were as follows:

Year	III	IV	V	IV
Amount	10,00,000	20,00,000	30,00,000	40,00,000

Prepare 9% Debenture Account form 1st April 2008 till all the debentures were redeemed.

The solution of Question 22 Chapter 10 of +2-A: –

9% Debentures Account
Date	Particular	Amount	Date	Particulars	Amount
			2008
			Apr. 01	By Debenture Application A/c	95,00,000
2009 Mar. 31	To Balance c/d	1,00,00,000	Apr. 01	By Discount on Issue of Debentures A/c	5,00,000
		1,00,00,000			1,00,00,000

2010 Mar. 31	To Balance c/d	1,00,00,000	2009 Apr. 01	By Balance b/d	1,00,00,000
		1,00,00,000			1,00,00,000
2011 Mar. 31	TO Debenture holders’ A/c	10,00,000	2010 Apr. 01	By Balance b/d	1,00,00,000
Mar. 31	To Balance c/d	90,00,000
		1,00,00,000			1,00,00,000
2012 Mar. 31	To Debenture holders’ A/c	20,00,000	2011 Apr. 01	By Balance b/d	90,00,000
Mar. 31	To Balance c/d	70,00,000
		90,00,000			90,00,000
2013 Mar. 31	To Debenture holders’ A/c	30,00,000	2012 Apr. 01	By Balance b/d	70,00,000
Mar. 31	To Balance c/d	40,00,000
		70,00,000			70,00,000
2014 Mar. 31	To Balance c/d	40,00,000	2013 Apr. 01	By Balance b/d	40,00,000
		40,00,000			40,00,000

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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)

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

September 3, 2020December 25, 2020 Shubham Sharma

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
Amount for DRR(25% of Debenture issued)=	40,00, 000X	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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 20 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 3, 2020December 25, 2020 Shubham Sharma

Question 20 Chapter 10 of +2-A

20. Venus Ltd. had 9,000, 9% Debentures of 100 each due for redemption. These debentures are to be redeemed in 3 equal instalments starting from 31st March 2015 at a premium of 10%. The company had a balance of 25,000 in the Debentures Redemption Reserve.
Pass necessary entries for the redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the debentures

The solution of Question 20 Chapter 10 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
2015
Mar.01	Statement of Profit and Loss	Dr		2,00,000
	To Debenture Redemption Reserve				2,00,000
	(Being Transfer of balance amount to DRR)
Apr.30	Debenture Redemption Investment A/c*	Dr		45,000
	To Bank A/c				45,000
	(Being Investments made in specified securities @15)
2015
Mar.30	9% Debentures A/c	Dr		3,00,000
	Premium on Redemption of Debentures A/c	Dr		30,000
	To Debenture holders’				3,30,000
	(Being Payment made to debenture holders)
	Bank A/c	Dr		45,000
	To Debenture Redemption Investment A/c				45,000
	(Being DRI encased)
	Debenture holders’ A/c	Dr		3,30,000
	To Bank A/c				3,30,000
	(Being Payment made to debenture holders)
2016
Mar.31	9% Debentures A/c	Dr		3,00,000
	Premium on Redemption of Debentures A/c	Dr		30,000
	To Debenture holder s’A/c				3,30,000
	(Being Debentures due for redemption)
	Bank A/c	Dr		45,000
	To Debenture Redemption Investment A/c**				45,000
	(Being DRI encased)
	Debenture holder s’ A/c	Dr		3,30,000
	To Bank A/c				3,30,000
	(Being Payment made to debenture holders)
Apr. 30	Debenture Redemption Investment A/c	Dr		45,000
	To Bank A/c				45,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2017
Mar.30	9% Debentures A/c	Dr		3,00,000
	Premium on Redemption of Debentures A/c	Dr		30,000
	To Debenture holders				3,30,000
	(Being Investment is made in specified securities@15)
	Bank A/c	Dr		45,000
	To Debenture Redemption Investment A/c				45,000
	(Being DRI encased)
	Debenture holders’ A/c	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Payment made to debenture holders)
	Debenture Redemption Reserve A/c	Dr		2,25,000
	To General Reserve A/c				2,25,000
	(Being DRR closed by transferring to General Reserve)

Amount to be transferred to DRR=	9, 00, 000x	25
Amount to be transferred to DRR=	9, 00, 000x	100
	= 2, 25, 000

Existing Balance in DRR = Rs 25,000
Net Amount to be Transferred = 2, 25, 000 −25, 000 = Rs 2, 00, 000

Amount transferred to DRI	= 9, 00, 000X	15
Amount transferred to DRI	= 9, 00, 000X	100
	=1, 35, 000

( in three equal instalments of Rs 45,000 each )

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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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 19 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 3, 2020December 25, 2020 Shubham Sharma

Question 19 Chapter 10 of +2-A

19. Hp Ltd. has 1,00,000;8% Debentures of 50 each due for redemption in five equal annual installments starting from 30th June, 2015. Debentures Redemption Reserve has a balance of 5,00,000 on that date . Pass journal entries.

The solution of Question 19 Chapter 10 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
2015
Mar.01	Statement of Profit and Loss	Dr		7,50,000
	To Debenture Redemption Reserve				7,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investments made in specified securities @15)
June 30	Debenture holders’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2016
Apr. 30	Debenture Redemption Investment A/c	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in securities equal to 15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holder s’A/c				10,00,000
	(Being Debentures due for redemption)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holder s’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2017
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		5,00,000
	To Debenture holders’ A/c				5,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holders’ A/c	Dr		10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve				2,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2018
Apr.30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holder s’ A/c				10,00,000
	(Being Debenture due for redemption)
June 30	Debenture holder s’ A/c	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Amount of debentures paid to debenture holders)
June 30	Bank A/c	Dr		10,00,000
	To Debenture Redemption Investment A/c				10,00,000
	(Being Investment made in securities, Owen cashed)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve A/c				2,50,000
	(Being DRR amount is transferred to General Reserve )
2019
Apr. 30	Debenture Redemption Investment A/c*	Dr		1,50,000
	To Bank A/c				1,50,000
	(Being Investment is made in specified securities@15)
June 30	8% Debentures A/c	Dr		10,00,000
	To Debenture holders’ A/c				10,00,000
	(Being Amount of debentures paid to debenture holders)
June 30	Bank A/c	Dr		1,50,000
	To Debenture Redemption Investment A/c**				1,50,000
	(Being Investment made in securities, nowhen cashed)
June 30	Debenture holders’ A/c	Dr
	To Bank A/c
	(Being Payment made to debenture holders)
June 30	Debenture Redemption Reserve A/c	Dr		2,50,000
	To General Reserve A/c				2,50,000
	(Being Debenture Redemption Reserve transferred to General Reserve)

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs dated11.02.2013, every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen per cent of the number of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entry for investment in Government securities has been passed a year before the first redemption year.
**Since nothing is specified, investments will be encased before debentures are redeemed.

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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)

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

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 18 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 2, 2020December 25, 2020 Shubham Sharma

Question 18 Chapter 10 of +2-A

18. Rich sugar Ltd. issued 20 Lakh ,8% Debentures divided into debentures of 100 each on 1st April 2013, redeemable in four equal annual instalments starting from 31st March 2016. The company decided to transfer to Debentures Redemption Reserve 2,50,000 each year on 31st March 2014 and 2015. The company invested 3,00,000 in Government securities as required by the Companies Act, 2013. Pass necessary journal entries for the above transactions.

The solution of Question 18 Chapter 10 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
2013
Apr.01	Bank A/c	Dr		20,00,000
	To 8% Debenture Application A/c				20,00,000
	(Being Debenture application money received)
Apr.01	8% Debenture Application A/c	Dr		20,00,000
	To 8% Debentures A/c				20,00,000
	(Being Debenture application transferred to 8)
2014
Mar. 31	Statement of Profit and Loss	Dr		2,50,000
	To Debenture Redemption Reserve A/c				2,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2015
Mar. 31	Statement of Profit and Loss	Dr		20,00,000
	To Debenture Redemption Reserve A/c				20,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
Apr. 30	Debenture holders’ A/c	Dr		20,00,000
	To Bank A/c				20,00,000
	(Being Amount paid to debenture holders)
Aug.31	Debenture Redemption Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Investment is made in securities equal to 15)
2016
Mar. 31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’A/c				5,00,000
	(Being Debentures due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2017
Mar.01	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debentures due for redemption)
Mar.31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2018
Mar.31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debentures due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2019
Mar.31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debenture due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Bank A/c	Dr		3,00,000
	To Debenture Redemption Investment A/c				3,00,000
	(Being Investment made in securities, Owen cashed)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve A/c				1,25,000
	(Being DRR amount is transferred to General Reserve )

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Comment if you have any question.

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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 17 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 2, 2020December 25, 2020 Shubham Sharma

Question 17 Chapter 10 of +2-A

17. On 1st April 2013 the following balances appeared in the books of Blue and Green Ltd.:

12%Debentures Redeemableon31stAugust, 2015	20,00,000
Debentures Redemption Reserve	2,00,000

The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures. Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of the company.

The solution of Question 17 Chapter 10 of +2-A: –

Books of Apollo Ltd
Date	Particulars		L.F.	Debit	Credit
2015
Mar. 31	Surplus i.e., Balance in Statement of Profit & Loss A/c	Dr		3,00,000
	To Debentures Redemption Reserve A/c				3,00,000
	(Being Amount transferred to DRR)
Apr.30	Debenture Redemption Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Amount invested unspecified security)
Aug.31	Bank A/c	Dr		3,00,000
	To Debenture Redemption Investment A/c				3,00,000
	(Being Profit transferred to Debenture Redemption Reserve)
Aug.31	9% Debenture A/c	Dr		20,00,000
	To Debenture Redemption Investment A/c				20,00,000
	(Being Debenture due for redemption)
Aug.31	Debenture holders’ A/c	Dr		20,00,000
	To Bank A/c				20,00,000
	(Being Amount paid to debenture holders)
Aug.31	Debenture Redemption Reserve A/c	Dr		5,00,000
	To General Reserve A/c				5,00,000
	(Being DRR amount is transferred to General Reserve )

Working Notes:

Amount required to be transferred to DRR	=25% of Face Value of Debentures
Amount required to be transferred to DRR	=25% of Face Value of Debentures	= 25% of Rs 20,00,000 = Rs 5,00,000
Existing Balance in DRR = Rs 2,00,000
Therefore, Amount transferred to DRR = Rs 5,00,000 – 2,00,000 = Rs 3,00,000
Amount required to be transferred to DRI	= 15% of Face Value of Debentures
	= 15% of Rs 20,00,000 = Rs 3,00,000

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Comment if you have any question.

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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 16 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 2, 2020December 25, 2020 Shubham Sharma

Question 16 Chapter 10 of +2-A

16. Mahima Ltd. issued 38,00,000, 9% Debentures of 100 each on 1st April 2013. The debentures were redeemable at a premium of 5% on 30th June 2015. The company transferred an amount of 9,50,000 to Debentures Redemption Reserve on 31st March 2015. Investments, as required by law, were made in a fixed deposit of a bank on 1st April 2015. Ignoring interest on fixed deposit, pass necessary journal entries starting from 31st March 2015 regarding the redemption of debentures.

The solution of Question 16 Chapter 10 of +2-A: –

Books of Apollo Ltd
Date	Particulars		L.F.	Debit	Credit
2015
Mar. 31	Surplus i.e., Balance in Statement of Profit & Loss A/c	Dr		9,50,000
	To Debentures Redemption Reserve A/c				9,50,000
	(Being Amount transferred to DRR)
Apr.01	Debenture Redemption Investment A/c	Dr		5,70,000
	To Bank A/c				5,70,000
	(Being Investment cashed and interest received)
June.30	Bank A/c	Dr		5,70,000
	To Debenture Redemption Investment A/c				5,70,000
	(Being Profit transferred to Debenture Redemption Reserve)
June.30	9% Debenture A/c	Dr		38,00,000
	Premium on Redemption of Debenture A/c	Dr		1,90,000
	To Debenture Redemption Investment A/c				39,90,000
	(Being Debenture due for redemption)
June.30	Debenture holders’ A/c	Dr		39,90,000
	To Bank A/c				39,90,000
	(Being Amount paid to debenture holders)
June. 30	Debenture Redemption Reserve A/c	Dr		9,50,000
	To General Reserve A/c				9,50,000
	(Being DRR amount is transferred to General Reserve )

Working Notes:

Amount required to be transferred to DRR	=25% of Face Value of Debentures
Amount required to be transferred to DRR	=25% of Face Value of Debentures	= 25% of Rs 38,00,000 = Rs 9,50,000
Amount required to be transferred to DRI	= 15% of Face Value of Debentures
	= 15% of Rs 38,00,000 = Rs 5,70,000

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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)

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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Question 15 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 1, 2020December 25, 2020 Shubham Sharma

Question 15 Chapter 10 of +2-A

15. On 1st April 2016, following were the balances of Blue Bird Ltd.:

10% Debentures redeemableon30thSeptember, 2017	15,00,000
Debentures Redemption Reserve	2,00,000

The company met the requirements of the Companies Act, 2013 regarding Debentures Redemption Reserve and Investment and redeemed the debentures. Pass necessary Journal entries for the above transactions in the books of the company.

The solution of Question 15 Chapter 10 of +2-A: –

Books of Apollo Ltd
Date	Particulars		L.F.	Debit	Credit
2017
Apr. 01	Statement of Profit and Loss	Dr		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Being Surplus amount is transferred to DRR )
Apr.30	Debenture Redemption Investment A/c	Dr		2,25,000
	To Bank A/c				2,25,000
	(Being Investment cashed and interest received)
Sept. 30	10% Debentures A/c	Dr		15,00,000
	To Debenture holders A/c				15,00,000
	(Being Profit transferred to Debenture Redemption Reserve)
Sept. 30	Bank A/c	Dr		2,25,000
	To Debenture Redemption Investment A/c				2,25,000
	(Being Investment made in specified securities, Owen cashed)
Sept. 30	Debenture holders’ A/c	Dr		15,00,000
	To Bank A/c				15,00,000
	(Being Amount paid to debenture holders)
Sept. 30	Debenture Redemption Reserve A/c	Dr		3,15,000
	To General Reserve A/c				3,15,000
	(Being DRR amount is transferred to General Reserve )

Working Notes:
Calculation of Amount transferred to DRR

As prescribed by Section 714 of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 21,00,000 are to be redeemed, so, the amount of DRR will be:

Amount of DRR 25 % of Debentures =	15, 00, 000 ×	25
Amount of DRR 25 % of Debentures =	15, 00, 000 ×	100
	= 3,75,000
Less: Amount already exists in DRR	=2,00,000
DRR created for redemption	=1,75,000

Investment made in specified =	15, 00, 000 ×	15
Investment made in specified =	15, 00, 000 ×	100
	= 2,25,000

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs dated11.02.2013, every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed a year before redemption year.

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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)

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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Question 14 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 1, 2020December 25, 2020 Shubham Sharma

Question 14 Chapter 10 of +2-A

14. Apollo Ltd. issued 21,000; 8% Debentures of 100 each on 1st April 2013 redeemable at a premium of 8% on 30th June 2019. The company decided to transfer the required amount to Debentures Redemption Reserve in three equal annual instalment starting with 31st March 2017. The required investment was made in Government Securities on 30th April 2019. Ignore interest on debentures and also an investment. Pass necessary Journal entries regarding the issue, transfer to DRR, investment, and redemption of debentures

The solution of Question 14 Chapter 10 of +2-A: –

Books of Apollo Ltd
Date	Particulars		L.F.	Debit	Credit
2013
Apr. 01	Bank A/c	Dr		21,00,000
	To 8% Debenture Application A/c				21,00,000
	(Being Debenture application money received)
Apr.31	8% Debenture Application A/c	Dr		21,00,000
	Loss on Issue of Debentures A/c	Dr		1,68,000
	To 8% Debentures A/c				21,00,000
	To Premium on Redemption A/c				1,68,000
	(Being Investment cashed and interest received)
2017
Mar 31	Statement of Profit and Loss	Dr		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Being Profit transferred to Debenture Redemption Reserve)
2018
Mar. 31	Statement of Profit and Loss A/c	Dr		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Being Profit transferred to Debenture Redemption Reserve)
2019
Mar. 31	Statement of Profit and Loss A/c	Dr		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Being Profit transferred to Debenture Redemption Reserve)
April 30	Debenture Redemption Investment A/c	Dr		3,15,000
	To Bank A/c				3,15,000
	(Being Investment is made in government securities equal to 15)
June 30	8% Debenture A/c	Dr		21,00,000
	Premium on Redemption Reserve A/c	Dr		1,68,000
	To Debenture holders’ A/c				22,68,000
	(Being Debenture due for redemption along with premium)
	Bank A/c	Dr		3,15,000
	To Debenture Redemption Investment A/c				3,15,000
	(Being Investment made in specified securities Owen cashed )
	Debenture holders’ A/c	Dr		22,68,000
	To Bank A/c				22,68,000
	(Being Payment made to debenture holders)
	Debenture Redemption Reserve A/c	Dr		5,25,000
	To General Reserve A/c				5,25,000
	(Being Debenture Redemption Reserve transferred to General Reserve)

Working Notes:
Calculation of Amount transferred to DRR

Amount of DRRRs	21, 00, 000 ×	25
Amount of DRRRs	21, 00, 000 ×	100
	= 5,25,000

Amount Instalments for the three years =	5, 25, 000
Amount Instalments for the three years =	3
	= 1,75,000

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Comment if you have any question.

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)

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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Question 13 Chapter 10 of +2-A – T.S. Grewal 12 Class

September 1, 2020December 25, 2020 Shubham Sharma

Question 13 Chapter 10 of +2-A

13. Godrej Ltd. has 20,000; 7% Debentures of 100 each due for redemption on 31st August 2018. There is a balance of 3,50,000 in Debentures Redemption Reserve Account as on 31st March 2016. Investment, as required by the Companies Act, 2013 is made on 1st April 2017 in fixed deposit bearing interest @ 6% p.a. Bank deducted TDS @ 10% on its maturity which is 31st March 2018. Pass Journal entries for the redemption of debentures.

The solution of Question 13 Chapter 10 of +2-A: –

In the Books of Godrej Ltd
Date	Particulars		L.F.	Debit	Credit
2017
Apr. 01	Debenture Redemption Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Investment made in specified securities)
2018
Mar. 31	Bank A/c 3, 00, 000 +16, 200	Dr		3,16,200
	Tax Payable A/c	Dr		1,800
	To Interest on Debenture Redemption Investment A/c				18,000
	To Debenture Redemption Investment A/c				3,00,000
	(Being Investment cashed and interest received)
Mar 31	Statement of Profit and Loss	Dr		1,50,000
	To Debenture Redemption Reserve A/c				1,50,000
	(Being DRR created)
Aug. 31	7% Debentures A/c	Dr		20,00,000
	To Debenture holders’ A/c				20,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
Aug. 31	Debenture holders’ A/c	Dr		20,00,000
	To Bank A/c				20,00,000
	(Being Payment made on the redemption of debentures)
Aug. 31	Debenture Redemption Reserve A/c	Dr		5,00,000
	To General Reserve A/c				5,00,000
	(Being Transfer of Debenture Redemption Reserve to General Reserve)

Amount of DRRRs	20, 00, 000 ×	25
Amount of DRRRs	20, 00, 000 ×	100
	= 5,00,000
Less: Amount already exists in DRR	=1,50,000
DRR created for redemption	= 3,50,000

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Comment if you have any question.

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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication