Question 15 Chapter 10 of +2-Part-1
15. (Redemption by drawing of lots) Kalyani Publishers, a listed co., issued 7,000 12% Debentures of RS. 100 each at 5% discount on 1 April 2014, which are redeemable at par. The company has been empowered by its Articles of Association to redeem Rs. 2,00,000 debentures annually by drawing a lot from 1 April 2016. Discount on debentures was written off as per AS-16. Interest is payable on 31 March and 30th September.
Journalise the above transaction for the year 2014-15 to 2016-17
The solution of Question 15 Chapter 10 of +2 Part-1:-
| Kalyani Publishers Journal |
|||||
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
| 1-4-14 | Bank A/c (7000 X 95) | Dr. | 6,65,000 | ||
| To 10% Debenture Application & Allotment A/c | 6,65,000 | ||||
| (Being app. Received for 7,000 debentures @ Rs. 95 each) | |||||
| Debenture Application & Allotment A/c | Dr. | 6,65,000 | |||
| Discount on Debenture A/c | Dr. | 35,000 | |||
| To 12 % Debenture A/c | 7,00,000 | ||||
| (Being app. Money adjusted ) | |||||
| 30-9-14 | Interest on debentures A/c | Dr. | 42,000 | ||
| To Bank A/c | 42,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-15 | Interest on debentures A/c | Dr. | 42,000 | ||
| To Bank A/c | 42,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-15 | Statement of profit & Loss | Dr. | 91,000 | ||
| To Interest on debentures A/c | 84,000 | ||||
| To Discount on Debenture A/c | 7,000 | ||||
| (Being expenses / losses written off) | |||||
| 30-9-15 | Interest on debentures A/c | Dr. | 42,000 | ||
| To Bank A/c | 42,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-16 | Interest on debentures A/c | Dr. | 42,000 | ||
| To Bank A/c | 42,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-16 | Statement of profit & Loss | Dr. | 91,000 | ||
| To Interest on debentures A/c | 84,000 | ||||
| To Discount on Debenture A/c | 7,000 | ||||
| (Being expenses / losses written off) | |||||
| 30-4-16 | Debenture Redemption Investment A/c | Dr. | 30,000 | ||
| To Bank A/c | 30,000 | ||||
| (Being investment made @ 15% of 2,00,000) | |||||
| 1-4-16 | Surplus in Statement of Profit & loss | Dr. | 1,75,000 | ||
| To Debenture Redemption Reserve A/c | 1,75,000 | ||||
| (Being 25% amount of debentures to be redeemed transferred to DRR) | |||||
| 1-4-16 | 12% Debenture A/c | Dr. | 2,00,000 | ||
| To Bank A/c | 2,00,000 | ||||
| (Being debentures redeemed) | |||||
| 30-9-16 | Interest on debentures A/c | Dr. | 30,000 | ||
| To Bank A/c | 30,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-17 | Interest on debentures A/c | Dr. | 30,000 | ||
| To Bank A/c | 30,000 | ||||
| (Being half years interest paid on debentures ) | |||||
| 31-3-17 | Statement of profit & Loss | Dr. | 67,000 | ||
| To Interest on debentures A/c | 60,000 | ||||
| To Discount on Debenture A/c | 7,000 | ||||
| (Being expenses / losses written off) | |||||
Note: 1. DRI is transferred to General Reserve after the redemption of all debentures.
2. Investment are not realised as they are needed in next year redemption as well.
It all about Question 15 Chapter 10 of +2-Part-1, If you have any problem please comment below.
Redemption of Debentures – explained with an example
End of Solution
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Chapter No. 8 – Company Accounts (Share Capital)
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Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
Chapter No. 11 – Financial Statements of a Company
Chapter No. 12 – Financial Statement Analysis
Chapter No. 13 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 14 – Accounting Ratios
Chapter No. 15 – Cash Flow Statement
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- Chapter No. 1 – Company Accounts (Share Capital)
- Chapter No. 2 – Issue of Debentures
- Chapter No. 3 – Redemption of Debentures
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- Chapter No. 5 -Financial Statement Analysis
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