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 Content covered in this article:
- The solution of Question 16 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)
- T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
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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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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