Question 18 Chapter 10 of +2-A - T.S. Grewal 12 Class

Question 18 Chapter 10 of +2-A

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The solution of Question 18 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)

18. Rich sugar Ltd. issued 20 Lakh ,8% Debentures divided into debentures of 100 each on 1st April 2013, redeemable in four equal annual instalments starting from 31st March 2016. The company decided to transfer to Debentures Redemption Reserve 2,50,000 each year on 31st March 2014 and 2015. The company invested 3,00,000 in Government securities as required by the Companies Act, 2013. Pass necessary journal entries for the above transactions.

The solution of Question 18 Chapter 10 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
2013
Apr.01	Bank A/c	Dr		20,00,000
	To 8% Debenture Application A/c				20,00,000
	(Being Debenture application money received)
Apr.01	8% Debenture Application A/c	Dr		20,00,000
	To 8% Debentures A/c				20,00,000
	(Being Debenture application transferred to 8)
2014
Mar. 31	Statement of Profit and Loss	Dr		2,50,000
	To Debenture Redemption Reserve A/c				2,50,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2015
Mar. 31	Statement of Profit and Loss	Dr		20,00,000
	To Debenture Redemption Reserve A/c				20,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
Apr. 30	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 Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Investment is made in securities equal to 15)
2016
Mar. 31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’A/c				5,00,000
	(Being Debentures due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2017
Mar.01	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debentures due for redemption)
Mar.31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2018
Mar.31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debentures due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve				1,25,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
2019
Mar.31	8% Debentures A/c	Dr		5,00,000
	To Debenture holder s’ A/c				5,00,000
	(Being Debenture due for redemption)
Mar. 31	Debenture holder s’ A/c	Dr		5,00,000
	To Bank A/c				5,00,000
	(Being Amount of debentures paid to debenture holders)
Mar.31	Bank A/c	Dr		3,00,000
	To Debenture Redemption Investment A/c				3,00,000
	(Being Investment made in securities, Owen cashed)
Mar.31	Debenture Redemption Reserve A/c	Dr		1,25,000
	To General Reserve A/c				1,25,000
	(Being DRR amount is transferred to General Reserve )

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs dated11.02.2013, every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen per cent of the number of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entry for investment in Government securities has been passed a year before the first redemption year.

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