X Ltd. decided to redeem Rs.25,000, 12% Debentures. It purchased Rs. 20,000 debentures in the open market at Rs. 98.50 each, the expenses being Rs. 100 and redeemed the balance of Rs. 5,000 debentures by draw of lots. Journalise.
Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
Own Debentures A/c | Dr. | 19,700 | ||
To Bank A/c | 19,700 | |||
(Purchase of open debentures) | ||||
12% Debentures A/c | Dr. | 20,000 | ||
To Own Debentures A/c | 19,700 | |||
To Profit on cancellation of debentures A/c | 300 | |||
(Redemption of own debentures) | ||||
Profit on cancellation of debentures A/c | Dr. | 400 | ||
To Capital Reserve A/c | 400 | |||
(Profit on redemption transferred to capital reserve) | ||||
12% Debentures A/c | Dr. | 5,000 | ||
To Debenture holders A/c | 5,000 | |||
(Amount due on redemption by draw of lots) | ||||
Debenture holders A/c | Dr. | 5,000 | ||
To Bank A/c | 5,000 | |||
(Payment made to debenture holders) | ||||
Note: It has been assumed that there was adequate an amount in Debenture Redemption Reserve.