Question 12 Chapter 10 of +2-A
Table of Contents
12. Manish Ltd. issued 40,00,000; 8% Debentures of 100 each on 1st April, 2017. The terms of issue stated that the debentures are to be redeemed at a premium of 5% on 30th June 2019. The company decided to transfer 10,00,000 out of profits to Debentures Redemption Reserve on 31st March 2018 and 10,00,000 on 31st March 2019.
Pass Journal entries regarding the issue and redemption of debentures, DRR and Investment without providing for the interest or loss on issue of debentures.
The solution of Question 12 Chapter 10 of +2-A: –
| Journal In the Books of India Textiles Corporation Ltd. |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| 2017 | |||||
| April 1 | Bank A/c | Dr | 40,00,000 | ||
| To Debenture Application A/c | 40,00,000 | ||||
| (Being Debenture application money received) | |||||
| April 30 | Debenture Application A/c | Dr | 40,00,000 | ||
| Loss on Issue of Debentures A/c | Dr | 2,00,000 | |||
| To 8% Debentures A/c | 40,00,000 | ||||
| To Premium on Redemption of Debenture | 2,00,000 | ||||
| (Being Debenture issued with the term repayable at 5% Premium) | |||||
| 2018 | |||||
| Mar 31 | Statement of Profit and Loss | Dr | 10,00,000 | ||
| To Debenture Redemption Reserve A/c | 10,00,000 | ||||
| (Being Surplus amount is transferred to Debenture Redemption Reserve) | |||||
| Mar 31 | Statement of Profit and Loss | Dr | 10,00,000 | ||
| To Debenture Redemption Reserve A/c | 10,00,000 | ||||
| (Being Surplus amount is transferred to Debenture Redemption Reserve) | |||||
| July 31 | Debenture Redemption Investment A/c | Dr | 6,00,000 | ||
| To Bank A/c | 6,00,000 | ||||
| (Being Investment is made in specified securities equal to 15%) | |||||
| June 30 | 8% Debentures A/c | Dr | 40,00,000 | ||
| Premium on Redemption of Debenture A/c | Dr | 2,00,000 | |||
| To Debentureholders’ A/c | 42,00,000 | ||||
| (Being DRR transferred to General Reserve) | |||||
| June 30 | Bank A/c | Dr | 6,00,000 | ||
| To Debenture Redemption Investment A/c | 6,00,000 | ||||
| (Being Investment made in securities, now encashed) | |||||
| June 30 | Debenture holders’ A/c | Dr | 42,00,000 | ||
| To Bank A/c | 42,00,000 | ||||
| (Being Amount paid to Debentureholders) | |||||
| June 30 | Debenture Redemption Reserve A/c | Dr | 20,00,000 | ||
| To General Reserve A/c | 20,00,000 | ||||
| (Being DRR transferred to General Reserve) | |||||
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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)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
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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