# Chapter No. 10 – Company Accounts (Redemption of Debentures) – USHA Publication Class +2 – Solution

Redemption of Debentures means the repayment of liabilities of debentures after the specific period of time or on the demand of the company.

## What is Redemption of Debentures?

When business discharges the liability for the debentures by repaying the amount of the debentures to the debenture holders is known as the redemption of the debenture.

Mainly the debentures always repaid after a fixed period time which is decided before issuing of debentures. The date of redemption has predefined in the terms of issue of debentures. But the debentures can be redeemed in instalments by drawing lots or by purchase from the open market before the actual date of redemption.

After the purchase from the market, The debentures can be cancelled or converted into equity shares.

### For Example:

ABK Limited issued 12,000 Debentures @ 100 on 01/01/2019 which are redeemable after 5 years. But the company want to redeem the debenture before the actual date of redemption. Provide the solution to the company how they can redeem the debentures before the actual redemption date in three years started from 01/01/2020.

#### Solution:

There is the company can redeem debenture in three equal instalments by drawing lots or by purchasing these from the open market and then cancel them.

Calculation of the amount of instalment:

Amount of Instalment =  Number of debentures/number of years

Number of debentures = 12000

Number of Years = 3 years

Amount of Instalment = 12,000 / 3

= 4,000/-

So, If the company buy 4,000 debentures from the open market every year at market price then they can successfully redeem all debentures.

Redemption of Debentures – explained with an example

## Chapter No. 10 – Company Accounts (Redemption of Debentures) – USHA Publication Class +2 – Solution

Question wise solution of the all Questions of Chapter No. 10 – Company Accounts (Redemption of Debentures) – USHA Publication Class +2 – Solutions are shown below: –

Question 1 Chapter 10 of +2-Part-1 1. (Amount of DRR/Journal) Punjab National Bank has Outstanding Balance of 3,000 9% Debentures ...
Question 2 Chapter 10 of +2-Part-1 2. (Amount of DRR/Journal) ICICI issued 5,000, 10%. Debentures of Rs. 100 each on ...
Question 3 Chapter 10 of +2-Part-1 3. (Journal) UTI has Rs. 10,00,000 95. Debentures of RS. 100 each due for ...
Question 4 Chapter 10 of +2-Part-1 4. (Journal) On 31 March 2017, an unlisted company has Rs. 15,00,000 10% Debentures ...
Question 5 Chapter 10 of +2-Part-1 5. (Redemption in Lumpsum) An unlisted company has to redeem Rs. 6,00,000 10% redeemable ...
Question 6 Chapter 10 of +2-Part-1 6. (Redemption out of Capital/Lumpsum) X Ltd., listed co, on 1st January, 2014, issued ...
Question 7 Chapter 10 of +2-Part-1 7. (Redemption in Lumpsum) Y Ltd., a listed co., redeemed Rs. 50,00,000, 8% Debentures ...
Question 8 Chapter 10 of +2-Part-1 8. (Redemption in Lumpsum/Balance of DRR is given) X Ltd. an unlisted co., had ...
Question 9 Chapter 10 of +2-Part-1 9. (Redemption in Lumpsum Balance of DRR/ Profit and Loss given/discount on Debenture) The ...
Question 10 Chapter 10 of +2-Part-1 10. (Partial redemption/Premium on redemption) On 31 May 2017, a company redeemed its 1200 ...
Question 11 Chapter 10 of +2-Part-1 11. (Issue of debentures/Redemption in installments and at premium) On 1 April, 2011 Reebock ...
Question 12 Chapter 10 of +2-Part-1 12. (Different Cases of Redemption) Pass journal entries in the following cases:Rs. 4,00,000 10% ...
Question 13 Chapter 10 of +2-Part-1 13. (Redemption by Drawings of lots) On 31.3.2019, X Ltd, a listed co., had ...
Question 14 Chapter 10 of +2-Part-1  14. (Redemption in Installments) An unlisted company issued 12,000 10%. Debentures of Rs. 100 ...
Question 15 Chapter 10 of +2-Part-1 15. (Redemption by drawing of lots) Kalyani Publishers, a listed co., issued 7,000 12% ...
Question 16 Chapter 10 of +2-Part-1 16. (Redeemable by Drawing a lots) A listed company has on 1-4-16 Rs. 4,00,000 ...
Question 17 Chapter 10 of +2-Part-1 17. (Journal/Ledger) A Company issued 5,000, 9% debentures, of 10 each on 1st Jan., ...
Question 18 Chapter 10 of +2-Part-1 18. (Amount of Profits to be Charged) West Ltd. issued 2,000, 10% debentures of ...
Question 19 Chapter 10 of +2-Part-1 19. (Journal/Ledger/Compound Interest) On 1st January, 2014 debentures worth Rs. 75,000were issued at par, ...
Question 20 Chapter 10 of +2-Part-1 20. (Debenture Account/Sinking Fund A/c/Sinking Fund Investment A/e) Shakti Chemical Ltd. issues 2,000, 9% ...
Question 21 Chapter 10 of +2-Part-1 21. (Ledger Accounts/Sinking Fund/Sinking Fund Investment) X and Co. Ltd. issued 1.000 6% debentures ...
Question 22 Chapter 10 of +2-Part-1 22. (Ledger Accounts) The Debenture Redemption Fund of Export Industries Ltd stood at 18,000, ...
Question 23 Chapter 10 of +2-Part-1 23. (Ledger Accounts/Sinking Fund) On 31.3.2017 the following balances appeared in the books of ...
Question 24 Chapter 10 of +2-Part-1 24. (Ledger Accounts/Sinking Fund Appeared in books) Litigrate a company gives you the following ...
Question 25 Chapter 10 of +2-Part-1 25. (Debenture redemption fund/Journal/Ledger) A company has Rs. 60,000, 5% debentures outstanding on 1st ...
Question 26 Chapter 10 of +2-Part-1 26. (Debenture A/c/Debenture Redemption Fund A/c/Debenture Redemption Fund Investment A/e) The balance sheet of ...
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 ...
Question 28 Chapter 10 of +2-Part-1 28. (Balances given/Ledger A/c/Sinking Fund) On June 30, 2015 the following balances stood in ...
Question 29 Chapter 10 of +2-Part-1 29. (Purchase of own debentures for immediate cancellation) On 31 March 2016 A company ...
Question 30 Chapter 10 of +2-Part-1 30. (Purchased own debentures for immediate cancellation) On 1st Jan., 2015, Satish Ltd. had ...
Question 32 Chapter 10 of +2-Part-1 32. (Purchased & Held as an investment & cancelled) On 1 October, purchased its ...
Question 33 Chapter 10 of +2-Part-1 33. (Purchases of own debentures/Journal) A company purchased as investment 500 10% Debentures of ...
Question 34 Chapter 10 of +2-Part-1 34. (Purchasing debentures in open market/Realisation of assets for redemption) A Company made an ...
Question 35 Chapter 10 of +2-Part-1 35. (Comprehensive) On 1st January 2015 a listed company made an issue of 500, ...
Question 36 Chapter 10 of +2-Part-1 36. (Redemption by issue of equity shares) Godrej Company on 1st January 2015 issued ...

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