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

Question 10 Chapter 10 of +2-A

Table of Contents

The solution of Question 10 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)

10. Mansi Ltd. had 6,000; 10% Debentures of 100 each due for redemption on 31st March 2019. Assuming that the debentures were redeemed out of profits, pass necessary journal entries for the redemption of debentures. There was a credit balance of 6,00,000 in Surplus, i.e., Balance in Statement of Profit and Loss.

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

Journal In the Books of Mansi Ltd.
Date	Particulars		L.F.	Debit	Credit
2018
Mar. 31	Statement of Profit or Loss	Dr		6,00,000
	To Debenture Redemption Reserve A/c				6,00,000
	(Being Surplus amount is transferred to DRR)
April 30	Debenture Redemption Investment A/c **	Dr		90,000
	To Bank A/c				90,000
	(Being Investment is made in specified securities equal to 15%)
2019
June 30	9%Debenture A/c	Dr		6,00,000
	To Debenture holders’ A/c				6,00,000
	(Being Debentures due for redemption)
June 30	Bank A/c	Dr		90,000
	To Debenture Redemption Investment A/c				90,000
	(Being Investment made in specified securities is now encashed)
Mar. 31	Debenture holders’ A/c	Dr		6,00,000
	To Bank A/c				6,00,000
	(Being Amount paid to Debentureholders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		6,00,000
	To General Reserve				6,00,000
	(Being DRR 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, entries for DRR and Investment have been passed in the previous accounting year.
*In case of redemption of debentures by profits 100% of the nominal value of debentures transfers to Debenture Redemption Reserve A/c.

Interest on Debentures:-

Date	Particulars		L.F.	Debit	Credit
2002
Mar. 31	Debenture Interest A/c	Dr		60,000
	To Debenture holders’ A/c				60,000
	(Being Interest on 9% Debentures to Debenture holders)
Mar. 31	Debenture holders’ A/c	Dr		60,000
	To Bank A/c				60,000
	(Being Payment of interest to Debenture holders )
Mar. 31	Statement of Profit and Loss	Dr		60,000
	To Debenture Interest A/c				60,000
	(Being Transfer of debenture interest to Statement of Profit and Loss)