Poonam ltd had a balance of rs 55,00,000 in it's statement of profit and loss. Instead of declaring a dividend it decided to redeem it's rs 50,00,000, 8% debentures at a premium of 10%. pass necessary journal entries in the books of the company for the redemption of debentures.
| Journal Entry | ||||||
| Date | Particulars | L.F. | Debit Amount Rs |
Credit Amount Rs |
||
| Profit and Loss A/c | Dr | 50,00,000 | ||||
| To Debenture Redemption Reserve | 50,00,000 | |||||
| [Debenture Redemption reserve is created as per Section 117(c)] | ||||||
| 8% Debenture A/c | Dr. | 50,00,000 | ||||
| Premium on Redemption of Debenture A/c | Dr. | 5,00,000 | ||||
| To Debenture Holders’ A/c | 55,00,000 | |||||
| (Amount payable to Debenture Holder for redemption of 50,000 Debentures of Rs 100 each redeemed @ Premium of 10%) | ||||||
| Debenture Holders’ A/c | Dr. | 55,00,000 | ||||
| To Cash/Bank A/c | 55,00,000 | |||||
| (Payment made to Debenture Holder) | ||||||
| Debenture Redemption Reserve A/c | Dr. | 50,00,000 | ||||
| To General Reserve | 50,00,000 | |||||
| (Debenture Redemption Reserve has been transferred to General Reserve) | ||||||