Question 08 Chapter 10 of +2-A - T.S. Grewal 12 Class

Question 08 Chapter 10 of +2-A

Table of Contents

The solution of Question 08 Chapter 10 of +2-A: –

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)

8. On 31st March, 2003, G Ltd. had 8,00,000;9% Debentures due for redemption. The company had a balance of 1,40,000 in its Debentures Redemption Reserve. Pass necessary journal entries for the redemption of debentures.

The solution of Question 08 Chapter 10 of +2-A: –

Journal In the Books of G Ltd.
Date	Particulars		L.F.	Debit	Credit
2002
Mar. 1	Statement of Profit or Loss	Dr		60,000
	To Debenture Redemption Reserve A/c (WN)				60,000
	(Being Surplus amount is transferred to DRR)
April 1	Debenture Redemption Investment A/c *	Dr		1,20,000
	To Bank A/c				1,20,000
	(Being Investment is made in specified securities equal to 15%)
2003
Mar.1	9%Debenture A/c	Dr		8,00,000
	To Debentureholders’ A/c				8,00,000
	(Being Debentures due for redemption)
Mar. 1	Debenture holders’ A/c	Dr		1,20,000
	To Debenture Redemption Investment A/c				1,20,000
	(Being Amount due for redemption paid to Debentureholders)
Mar. 31	Debenture holders’ A/c	Dr		8,00,000
	To Bank A/c				8,00,000
	(Being Amount paid to Debentureholders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		2,00,000
	To General Reserve				2,00,000
	(Being DRR transferred to General Reserve)

Note: All India Financial Institutions are exempted from creating DRR because Company Act,2013 is specified securities.

Working Note:

Amount of DRRRs	= Rs 8,00,000X	25
Amount of DRRRs	= Rs 8,00,000X	100
	=Rs 2,00,000
Less: Already In DRR	=Rs 1,40,000
DRR created for redemption	= Rs 60,000

Interest on Debentures:-

Date	Particulars		L.F.	Debit	Credit
2002
Mar. 31	Debenture Interest A/c	Dr		72,000
	To Debentureholders’ A/c				72,000
	(Being Interest on 9% Debentures to Debentureholders)
Mar. 31	Debenture holders’ A/c	Dr		72,000
	To Bank A/c				72,000
	(Being Payment of interest to Debentureholders )
Mar. 31	Statement of Profit and Loss	Dr		72,000
	To Debenture Interest A/c				72,000
	(Being Transfer of debenture interest to Statement of Profit and Loss)

*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, entries for DRR and Investment have been passed in the previous accounting year.

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