Unimax Accountancy Class 12 Part 2 - 2023 Solutions Chapter 3 Redemption of Debentures - Unimax

Question No 01 Chapter 3 - UNIMAX Class 12 Part 2 - 2021

‘N’ Ltd. (an unlisted company) issued 10,000, 6% debentures of ₹ 100 each at a premium of 5% on 1st April 2019 redeemable on 31st March 2022. The issue was fully subscribed. Debentures to be redeemed towards debenture redemption investment on 30th April 2021.
Record necessary entries for issue and redemption of debentures.

The solution of Question 01 Chapter 3 of +2 Part-2: -

Journal
 Books of ‘N’ Ltd.

Date	Particulars		L.F.	Debit	Credit
2019
April 1	Bank A/c	Dr.		10,50,000
	To Debenture application & allotment A/c				10,50,000
	(Being receipt of application money)
April 1	Debenture Application & Allotment A/c	Dr.		10,50,000
	To Debenture A/c				10,00,000
	To Securities premium reserve A/c				50,000
	(Being application money transferred)
2021 March 31	Surplus statement of Profit & Loss A/c	Dr.		1,00,000
	To Debentures redemption reserve A/c				1,00,000
	(Being transfer of profit equity to 10% of the nominal value of debenture issued)
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)
2020 March 31	Bank A/c	Dr.		1,50,000
	To Debenture redemption investment A/c				1,50,000
	(Being investment uncashed)
March 31	Debenture A/c	Dr.		10,00,000
	To Debenture holder A/c				10,00,000
	(Being amount due on redemption)
March 31	Debenture holder A/c	Dr.		10,00,000
	To Bank A/c				10,00,000
	(Being payment of amount due to debenture holder)
March 31	Debenture redemption reserve A/c	Dr.		1,00,000
	To General reserve A/c				1,00,000
	(Being transfer of debenture redemption reserve A/c to general reserve A/c on redemption)

Note: (1) DRR will be created on 31st March of the previous year.
(2) Minimum investment of 15% will be made on or before 30th April of the year in which debenture are to be redeemed and the same will be in cashed at the time redemption of debentures.