Question 21 Chapter 10 of +2-A - T.S. Grewal 12 Class

Question 21 Chapter 10 of +2-A

Table of Contents

The solution of Question 21 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)

21. Tata Motors Ltd. issued 40,000;7% Debentures of 100 each on 1st July 2009 redeemable at a premium of 5% as under:


On 31st March 2015	16,000 Debentures
On 31st March 2016	16,000 Debentures
On 31st March 2017	8,000 Debentures

It was decided to transfer amount out of profit to Debentures Redemption Reserve 2,00,000 on 31st March 2012; 4,00,000 on 31st March 2013 and balance on 31st March 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realis them after the last redemption. Pass journal entries ignoring interest.

The solution of Question 21 Chapter 10 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
2009
Jul.01	Bank A/c	Dr		40,00,000
	To Debenture Application A/c				40,00,000
	(Being Debenture application money received)
	Debenture Application A/c	Dr		40,00,000
	Loss on Issue of Debentures A/c	Dr		2,00,000
	To 7% Debentures A/c				40,00,000
	To Premium on Redemption A/c				2,00,000
	(Being Application money transfer to Debenture capital)
2012
Mar.31	Statement of Profit and Loss	Dr		2,00,000
	To Debenture Redemption Reserve A/c				2,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2013
Mar. 31	Statement of Profit and Loss	Dr		45,000
	To Debenture Redemption Reserve A/c				45,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
	Debenture holders’ A/c	Dr		4,00,000
	To Bank A/c				4,00,000
	(Being Payment made to debenture holders)
2014
Mar.31	Statement of Profit and Loss	Dr		4,00,000
	To Debenture Redemption Reserve A/c				4,00,000
	(Being Surplus amount is transferred to Debenture Redemption Reserve)
2015
Mar. 30	7% Debenture A/c	Dr		16,00,000
	Premium on Redemption A/C	Dr		80,000
	To Debenture holders’ A/c				16,80,000
	(Being DRI encased)
Mar. 31	Debenture holder s’ A/c	Dr		16,80,000
	To Bank A/c				16,80,000
	(Being Payment made to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		4,00,000
	To General Reserve				4,00,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
Apr. 30	Debenture Redemption Investment A/c	Dr		3,00,000
	To Bank A/c				3,00,000
	(Being Investment is made in specified securities@15)
2016
Mar . 31	7% Debenture A/c	Dr		16,00,000
	Premium on Redemption of Debentures A/c	Dr		80,000
	To Debenture holders				16,80,000
	(Being DRI encased)
Mar. 31	Debenture holders’ A/c	Dr		16,80,000
	To Bank A/c				16,80,000
	(Being Payment made to debenture holders)
Mar. 31	Debenture Redemption Reserve A/c	Dr		4,00,000
	To General Reserve A/c				4,00,000
	(Being Debenture Redemption Reserve transferred to General Reserve)
Apr. 30	Debenture Redemption Investment A/c	Dr		1,20,000
	To Bank A/c				1,20,000
	(Being Investment is made in specified securities@15)
2017
Mar. 31	7% Debenture A/c	Dr		8,00,000
	Premium on Redemption of Debentures A/c	Dr		40,000
	To Debenture holders				8,40,000
	(Being DRI encased)
Mar. 31	Debenture holders’ A/c	Dr		8,40,000
	To Bank A/c				8,40,000
	(Being Payment made to debenture holders)
Mar. 31	Bank A/c	Dr		4,00,000
	To Debenture Redemption Investment A/c				4,00,000
	(Being Investment made in securities, noncached)
Apr. 30	Debenture Redemption Investment A/c	Dr		1,20,000
	To General Reserve A/c				1,20,000
	(Being Debenture Redemption Reserve transferred to General Reserve)

Amount for DRR(25% of Debenture issued)=	40,00, 000X	25
Amount for DRR(25% of Debenture issued)=	40,00, 000X	100
	=Rs 10, 00,000 Less: Amount transferred in 2012