Question 27 Chapter 10 of +2-Part-1
27. (Redemption at Premium/Debenture Sinking Fund given/Ledger Accounts) Limited Company has outstanding Rs. 1,00,000 of 12% Debentures redeemable at the Company’s option on or after 1st January, 2015 at 105 per cent. Interest has been paid half yearly on 30 June and 31st December.
Amounts have been appropriated annually out of profits to a Debentures Sinking Fund and investments have been purchased at a cost which equals the amounts of Sinking Fund. On 31st December, 2010 the balance on the following accounts were:
| ₹ | |
| Securities Premium A/c | 30,000 |
| Debentures Sinking Fund A/c | 90,000 |
| General Reserve A/c | 20,000 |
| P&L Account (Cr.) | 18,000 |
| 5% Debentures | 1,00,000 |
| Debenture Sinking Fund Investment | 90,000 |
| Balance at Bank | 25,000 |
The directors decided to exercise their option to redeem the debentures on 1st January, 2010 and towards financing this the investments were sold for cash realizing 87,000; Write up Ledger Account concerned to give effect to the redemption.
The solution of Question 27 Chapter 10 of +2 Part-1:-
12% Debentures Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Bank A/c | 1,00,000 | Jan. 1 | By Balance b/d | 1,00,000 |
| 1,00,000 | 1,00,000 |
Debentures Sinking Fund Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Debentures Sinking Fund Debentures A/c | 3,000 | Jan. 1 | By Balance b/d | 90,000 |
| To General Reserve | 87,000 | ||||
| 90,000 | 90,000 |
Debentures Redemption Fund Investment Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Balance b/d | 90,000 | Jan. 1 | By Bank A/c | 87,000 |
| Jan. 1 | By Debentures Sinking Fund A/c | 3,000 | |||
| 90,000 | 90,000 |
Premium on Redemption of Debentures Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Bank A/c | 5,000 | Jan. 1 | By Securities Premium Reserve A/c | 5,000 |
| 5,000 | 5,000 |
Securities Premium Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Premium on Redemption A/c | 5,000 | Jan. 1 | By Balance b/d | 30,000 |
| To Balance c/d | 25,000 | ||||
| 30,000 | 30,000 |
General Reserve Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Bank A/c | 1,07,000 | Jan. 1 | By Balance b/d | 20,000 |
| By Debentures Sinking Fund A/c | 87,000 | ||||
| 1,07,000 | 1,07,000 |
Bank Account
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| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Jan. 1 | To Balance b/d | 25,000 | Jan. 1 | By Debentures A/c | 1,00,000 |
| To Deb. Red. Fund Investment A/c | 87,000 | By Premium on Red. of Deb. A/c | 5,000 | ||
| By Balance c/d | 7,000 | ||||
| 1,12,000 | 1,12,000 |
It all about Question 27 Chapter 10 of +2-Part-1, If you have any problem please comment below.
Redemption of Debentures – explained with an example
End of Solution
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Question 6 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1
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Chapter-Wise Solution of Usha Publication Accountancy – Part 2 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 2 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 8 – Company Accounts (Share Capital)
Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
Chapter No. 11 – Financial Statements of a Company
Chapter No. 12 – Financial Statement Analysis
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Chapter No. 13 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 14 – Accounting Ratios
Chapter No. 15 – Cash Flow Statement
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 2 Class 12 by Unimax Publication
- Chapter No. 1 – Company Accounts (Share Capital)
- Chapter No. 2 – Issue of Debentures
- Chapter No. 3 – Redemption of Debentures
- Chapter No. 4 – Financial Statements of a Company (Balance Sheet Only)
- Chapter No. 5 -Financial Statement Analysis
- Chapter No. 6 – Tools/Methods of Financial Analysis
- Chapter No. 7 – Ratio Analysis
- Chapter No. 8 – Cash Flow Statement
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1. Accountancy – Part 1 Class 12 – Session 2024-25 By Usha Publication
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