Question 21 Chapter 10 of +2-A
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Video Tag: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 |
| 100 | ||
| =Rs 10, 00,000 Less: Amount transferred in 2012 |
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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
