Question 35 Chapter 10 of +2-Part-1 - USHA Publication 12 Class Part

Question 35 Chapter 10 of +2-Part-1

35. (Comprehensive) On 1st January 2015 a listed company made an issue of 500, 10% Debentures of Rs. 1,000 each at Rs. 960 per debentures. The terms of issue provided for the redemption of Rs. 20,000 debentures every year commencing from 2016 either by purchase or by drawings at par at the company’s option Rs. 5,000 was also written off the Discount on Debentures in each of the year 2015 and 2016.
During 2016, the company purchased for cancellation Debentures of the face value of RS. 8,000 @ Rs. 950 and of Rs. 12,000 @ Rs. 900. Journalise the above transactions and also show how the profit on redemption would be treated.

The solution of Question 35 Chapter 10 of +2 Part-1:-

Journal
Date	Particulars		L.F.	Debit ₹	Credit ₹
2015
Jan. 1	Bank A/c	Dr.		4,80,000
	Discount on Debenture A/c	Dr.		20,000
	To Debenture Sinking Fund A/c				5,00,000
	(Being issue of 500 debentures @ Rs. 960)

Dec. 31	Interest on Debentures A/c	Dr.		50,000
	To Bank A/c				50,000
	(Being interest paid on debentures )

Dec. 31	Statement of profit & Loss	Dr.		55,000
	To Discount on Debenture A/c				5,000
	To Interest on debentures A/c				50,000
	(Being part of discount & interest transferred to P&L A/c )
2016
Dec. 31	Interest on debentures A/c	Dr.		50,000
	To Bank A/c				50,000
	(Being interest paid on debentures )

Dec. 31	10% Debenture A/c	Dr.		20,000
	To Bank A/c				18,400
	To Profit on Red. of Deb. A/c				1,600
	(Being purchase & cancellation of Debentures)

	Profit on Red. Of Deb. A/c	Dr.		1,600
	Statement of profit & Loss	Dr.		3,400
	To Discount on Debenture A/c				5,000
	(Being discount written off & profit on Red. Transferred to P&L A/c )

	Statement of profit & Loss	Dr.		50,000
	To Interest on Debenture A/c				50,00
	(Being interest on debentures transferred to P& L A/c )

Working Note :-

1. Debentures purchased for cancellation
	8,000 X 950	= 7,600
	1,000
	12,000 X 900	= 10,800
	1,000
	Total Payment	= 18,400

It all about Question 35 Chapter 10 of +2-Part-1, If you have any problem please comment below.

Redemption of Debentures – explained with an example

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Question 35 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

Question 36 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Chapter No. 8 – Company Accounts (Share Capital)

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Chapter No. 10 – Company Accounts (Redemption of Debentures)

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The solution of Question 35 Chapter 10 of +2 Part-1:-

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