Question 20 Chapter 10 of +2-A
20. Venus Ltd. had 9,000, 9% Debentures of 100 each due for redemption. These debentures are to be redeemed in 3 equal instalments starting from 31st March 2015 at a premium of 10%. The company had a balance of 25,000 in the Debentures Redemption Reserve.
Pass necessary entries for the redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the debentures
The solution of Question 20 Chapter 10 of +2-A: –
| Date | Particulars |
L.F. | Debit | Credit | |
| 2015 | |||||
| Mar.01 | Statement of Profit and Loss | Dr | 2,00,000 | ||
| To Debenture Redemption Reserve | 2,00,000 | ||||
| (Being Transfer of balance amount to DRR) | |||||
| Apr.30 | Debenture Redemption Investment A/c* | Dr | 45,000 | ||
| To Bank A/c | 45,000 | ||||
| (Being Investments made in specified securities @15) | |||||
| 2015 | |||||
| Mar.30 | 9% Debentures A/c | Dr | 3,00,000 | ||
| Premium on Redemption of Debentures A/c | Dr | 30,000 | |||
| To Debenture holders’ | 3,30,000 | ||||
| (Being Payment made to debenture holders) | |||||
| Bank A/c | Dr | 45,000 | |||
| To Debenture Redemption Investment A/c | 45,000 | ||||
| (Being DRI encased) | |||||
| Debenture holders’ A/c | Dr | 3,30,000 | |||
| To Bank A/c | 3,30,000 | ||||
| (Being Payment made to debenture holders) | |||||
| 2016 | |||||
| Mar.31 | 9% Debentures A/c | Dr | 3,00,000 | ||
| Premium on Redemption of Debentures A/c | Dr | 30,000 | |||
| To Debenture holder s’A/c | 3,30,000 | ||||
| (Being Debentures due for redemption) | |||||
| Bank A/c | Dr | 45,000 | |||
| To Debenture Redemption Investment A/c** | 45,000 | ||||
| (Being DRI encased) | |||||
| Debenture holder s’ A/c | Dr | 3,30,000 | |||
| To Bank A/c | 3,30,000 | ||||
| (Being Payment made to debenture holders) | |||||
| Apr. 30 | Debenture Redemption Investment A/c | Dr | 45,000 | ||
| To Bank A/c | 45,000 | ||||
| (Being Debenture Redemption Reserve transferred to General Reserve) | |||||
| 2017 | |||||
| Mar.30 | 9% Debentures A/c | Dr | 3,00,000 | ||
| Premium on Redemption of Debentures A/c | Dr | 30,000 | |||
| To Debenture holders | 3,30,000 | ||||
| (Being Investment is made in specified securities@15) | |||||
| Bank A/c | Dr | 45,000 | |||
| To Debenture Redemption Investment A/c | 45,000 | ||||
| (Being DRI encased) | |||||
| Debenture holders’ A/c | Dr | 1,50,000 | |||
| To Bank A/c | 1,50,000 | ||||
| (Being Payment made to debenture holders) | |||||
| Debenture Redemption Reserve A/c | Dr | 2,25,000 | |||
| To General Reserve A/c | 2,25,000 | ||||
| (Being DRR closed by transferring to General Reserve) | |||||
| Amount to be transferred to DRR= | 9, 00, 000x | 25 |
| 100 | ||
| = 2, 25, 000 |
Existing Balance in DRR = Rs 25,000
Net Amount to be Transferred = 2, 25, 000 −25, 000 = Rs 2, 00, 000
| Amount transferred to DRI | = 9, 00, 000X | 15 |
| 100 | ||
| =1, 35, 000 |
( in three equal instalments of Rs 45,000 each )
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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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
