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 |
| = 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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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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