Question No 06 Chapter 3 – UNIMAX Class 12 Part 2 – 2021
Jyoti Ltd. (an unlisted company) had issued 10,000, 8% debenture which are due to be redeemed out of profit on 1st Oct. 2022 at a premium of 5%. The company had a debenture redemption reserve of ₹ 1,10,000. It was decided to invest the required amount in Debenture Redemption Investment. Pass necessary journal entries for the redemption of debentures.
The solution of Question 06 Chapter 3 of +2 Part-2: –
Journal
Books of ‘Jyoti’ Ltd.
| Date | Particulars |
L.F. | Debit | Credit | |
| 2022 March 31 | Surplus is statement in Profit & Loss A/c | Dr. | 8,90,000 | ||
| To Debenture redemption reserve A/c | 8,90,000 | ||||
| (Being transfer of profit to Debenture Redemption Reserve) | |||||
| April 30 | Debenture redemption investment A/c | Dr. | 1,50,000 | ||
| To Bank A/c | 1,50,000 | ||||
| (Being investment made @ 15% of the face value of debenture to be redeemed) | |||||
| Oct. 1 | Bank A/c | Dr. | 1,50,000 | ||
| To Debenture redemption investment A/c | 1,50,000 | ||||
| (Being investment encashed) | |||||
| Oct. 1 | Debenture A/c | Dr. | 10,00,000 | ||
| Premium on Redemption of debenture A/c | Dr. | 50,000 | |||
| To Debenture holder A/c | 10,50,000 | ||||
| (Being amount due on redemption) | |||||
| Oct. 1 | Debenture holder A/c | Dr. | 10,50,000 | ||
| To Bank A/c | 10,50,000 | ||||
| (Being payment of amount due to debenture holders) | |||||
| Oct. 1 | Debenture redemption reserve A/c | Dr. | 10,00,000 | ||
| To General reserve A/c | 10,00,000 | ||||
| (Being transfer of Debenture Redemption Reserve A/c to General Reserve A/c on redemption) | |||||
Note:
Since the debenture are to be redeemed purely out of profit, an amount equal to 100% of debenture redeemed i.e., ₹ 10,00,000 is transferred to Debenture Redemption Reserve. If such Reserve is created only with 10% of the amount of debentures redeemed, it would means that remaining 90% of the debenture have been redeemed out of capital.
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Share Capital: Meaning, Types, and Classes
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
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