Question 17 Chapter 10 of +2-A
Table of Contents
17. On 1st April 2013 the following balances appeared in the books of Blue and Green Ltd.:
| 12%Debentures Redeemableon31stAugust, 2015 | 20,00,000 |
| Debentures Redemption Reserve | 2,00,000 |
The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures. Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of the company.
The solution of Question 17 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 | 3,00,000 | ||
| To Debentures Redemption Reserve A/c | 3,00,000 | ||||
| (Being Amount transferred to DRR) | |||||
| Apr.30 | Debenture Redemption Investment A/c | Dr | 3,00,000 | ||
| To Bank A/c | 3,00,000 | ||||
| (Being Amount invested unspecified security) | |||||
| Aug.31 | Bank A/c | Dr | 3,00,000 | ||
| To Debenture Redemption Investment A/c | 3,00,000 | ||||
| (Being Profit transferred to Debenture Redemption Reserve) | |||||
| Aug.31 | 9% Debenture A/c | Dr | 20,00,000 | ||
| To Debenture Redemption Investment A/c | 20,00,000 | ||||
| (Being Debenture due for redemption) | |||||
| Aug.31 | Debenture holders’ A/c | Dr | 20,00,000 | ||
| To Bank A/c | 20,00,000 | ||||
| (Being Amount paid to debenture holders) | |||||
| Aug.31 | Debenture Redemption Reserve A/c | Dr | 5,00,000 | ||
| To General Reserve A/c | 5,00,000 | ||||
| (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 20,00,000 = Rs 5,00,000 | |
| Existing Balance in DRR = Rs 2,00,000 | |
| Therefore, Amount transferred to DRR = Rs 5,00,000 – 2,00,000 = Rs 3,00,000 | |
| Amount required to be transferred to DRI | = 15% of Face Value of Debentures |
| = 15% of Rs 20,00,000 = Rs 3,00,000 | |
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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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