Double Entry Book Keeping Ts Grewal (2017) Solutions for Class 12 Commerce Accountancy Chapter 8 Joint Stock Company Accounts Redemption Of Debentures are provided here with simple step-by-step explanations. These solutions for Joint Stock Company Accounts Redemption Of Debentures are extremely popular among class 12 Commerce students for Accountancy Joint Stock Company Accounts Redemption Of Debentures Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal (2017) Book of class 12 Commerce Accountancy Chapter 8 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal (2017) Solutions. All Double Entry Book Keeping Ts Grewal (2017) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 8.33:

Answer:

Amount Required to be transferred to Debentures  Redemption  Reserve                                                           =25% of Face value of Debentures                                          =(25% of Rs 10,00,000)50,000= Rs 2,00,000

Page No 8.33:

Answer:

Amount Required to be transferred to Debentures  Redemption  Reserve                                           =25% of Face value of Debentures                               =(25% of Rs 20,00,000)50,000=Rs 4,50,000

Page No 8.33:

Answer:

Section 71 (4) of the Companies Act, 2013 requires that an amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account. Accordingly, Rs 50,000 is required to be transferred to DRR (i.e. 25% of 2,00,000) before the actual date of redemption of debentures.

Page No 8.33:

Answer:

Section 71 (4) of the Companies Act, 2013 requires that an amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account. So, Rs 2, 50,000 is required to be transferred to DRR (i.e. 25% of 10,00,000). Further, Rule 18 (7) requires every company that is required to create DRR to invest an amount at least equal to 15% of the value of debentures in specified securities. So, Rs 1,50,000 is to be invested in specified securities (i.e. 15% of 10,00,000).

Journal

In the Books of Nirbhai Chemicals Ltd.

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2015

 

 

 

 

 

June 30

Bank A/c

Dr.

 

10,80,000

 

 

To 6% Debentures A/c

 

 

 

10,00,000

 

To Securities Premium Reserve A/c

 

 

 

80,000

 

(Debentures issued)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

March 31

Statement of Profit and Loss

Dr.

 

2,50,000

 

 

To Debenture Redemption Reserve A/c

 

 

 

2,50,000

 

(DRR created)

 

 

 

 

 

 

 

 

 

 

April 30

Debenture Redemption Investment A/c

Dr.

 

1,50,000

 

 

To Bank A/c

 

 

 

1,50,000

 

(Investment made in specified securities)

 

 

 

 

 

 

 

 

 

 

June 30 Bank A/c Dr.   1,50,000  
     To Debenture Redemption Investment A/c       1,50,000
  (Investments encashed)        
           

June 30

6% Debentures A/c

Dr.

 

10,00,000

 

 

To Debentureholders’ A/c

 

 

 

10,00,000

 

(Amount on 6% debentures due)

 

 

 

 

 

 

 

 

 

 

June 30

Debentureholders’ A/c

Dr.

 

10,00,000

 

 

To Bank A/c

 

 

 

10,00,000

 

(Payment made on redemption of debentures)

 

 

 

 

 

 

 

 

 

 

June 30

Debenture Redemption Reserve A/c

Dr.

 

2,50,000

 

 

To General Reserve A/c

 

 

 

2,50,000

 

(Transfer of Debenture Redemption Reserve to General Reserve)

 

 

 

 

 

 

 

 

 

Note: Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
2017          
Mar. 31 Debenture Interest A/c Dr.   45,000  
    To Debentureholders’ A/c       45,000
  (Interest on 6% debentures due for 9 months)        
           
Mar.31 Debentureholders’ A/c Dr.   45,000  
    To Bank A/c       45,000
  (Payment of interest to debentureholders’)        
           
Mar. 31 Statement of Profit and Loss Dr.   45,000  
    To Debenture Interest A/c       45,000
  (Transfer of debenture interest to Statement of Profit and Loss)        

Page No 8.33:

Answer:

Books of IFCI Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2010          

April 01

Bank A/c

Dr.

 

5,00,00,000

 

 

To 9% Debenture Application A/c

 

 

5,00,00,000

 

(Debenture application money received)

 

 

 

 

 

 

 

 

April 01

9% Debenture Application A/c

Dr.

 

5,00,00,000

 

 

To 9% Debentures A/c

 

 

5,00,00,000

 

(Debenture application money transferred to debenture account)

 

 

 

 

 

 

 

 

2017        

April 01

9% Debentures A/c

Dr.

 

5,00,00,000

 

 

To Debentureholders’ A/c

 

 

5,00,00,000

 

(Debentures due for redemption)

 

 

 

 

 

 

 

 

April 01

Debentureholders’ A/c

Dr.

 

5,00,00,000

 

 

To Bank A/c

 

 

5,00,00,000

 

(Amount due for redemption paid to debenture holders)

 

 

 

 

 

 

 

 

Notes:
1. All India Financial Institutions are exempted from creating DRR. Hence, in this case, no DRR is to be created.
2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures  every year from April 01, 2010 to March 31, 2017 as given below.
 

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
2010          
Mar. 31 Debenture Interest A/c Dr.   45,00,000  
    To Debentureholders’ A/c       45,00,000
  (Interest on 9% debentures due)        
           
Mar.31 Debentureholders’ A/c Dr.   45,00,000  
    To Bank A/c       45,00,000
  (Payment of interest to debentureholders’)        
           
Mar. 31 Statement of Profit and Loss Dr.   45,00,000  
    To Debenture Interest A/c       45,00,000
  (Transfer of debenture interest to Statement of Profit and Loss)        

 

Page No 8.33:

Answer:

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

31/3/2012*

Statement of Profit or Loss

Dr.

 

60,000

 

 

To Debenture Redemption Reserve A/c

 

 

60,000

 

(Surplus amount is transferred to DRR)

 

 

 

 

 

 

 

 

30/4/2012* Debenture Redemption Investment A/c             Dr.   1,20,000  
    To Bank A/c     1,20,000
  (Investment is made in specified securities equal to 15% of the value of debentures redeemed)      
         

31/3/2013

9% Debentures A/c

Dr.

 

8,00,000

 

 

To Debentureholders’ A/c

 

 

8,00,000

 

(Debentures due for redemption)

 

 

 

 

 

 

 

 

31/3/2013 Bank A/c                                                Dr.   1,20,000  
    To Debenture Redemption Investment A/c     1,20,000
  (Investment made in specified securities is now encashed)      
         

31/3/2013

Debentureholders’ A/c

Dr.

 

8,00,000

 

 

To Bank A/c

 

 

8,00,000

 

(Amount paid to debentureholders)

 

 

 

 

 

 

 

 

31/3/2013

Debenture Redemption Reserve A/c

Dr.

 

2,00,000

 

 

To General Reserve

 

 

2,00,000

 

(DRR transferred to General Reserve)

 

 

 

 

 

 

 

 

Working Note:



Notes:


1. Interest is not calculated on Investment as rate of interest is not provided.
2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures for the year ending March 31, 2012 as given below. In the similar manner, the entries related to interest on debentures for the year ending March 31, 2013 can also be journalised.

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
2012          
Mar. 31 Debenture Interest A/c Dr.   72,000  
    To Debentureholders’ A/c       72,000
  (Interest on 9% debentures due)        
           
Mar. 31 Debentureholders’ A/c Dr.   72,000  
    To Bank A/c       72,000
  (Payment of interest to debentureholders’)        
           
Mar. 31 Statement of Profit and Loss Dr.   72,000  
    To Debenture Interest A/c       72,000
  (Transfer of debenture interest to Statement of Profit and Loss)        

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accodingly, entries for DRR and Investment have been passed in the previous accounting year.

Page No 8.33:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

 

 

8% Debentures A/c

Dr.

 

50,00,000

 

 

    To Debenture holders’  A/c

 

 

 

50,00,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

 

Debenture holder’s  A/c

Dr.

 

50,00,000

 

 

    To Bank A/c

 

 

 

50,00,000

 

(Debentures redeemed at par)

 

 

 

 

 

 

 

 

 

 

Page No 8.33:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

(1)

Bank A/c

Dr.

 

2,75,000

 

 

    To Debenture Application & Allotment A/c

 

 

 

2,75,000

 

(Application money received on issue of debentures)

 

 

 

 

 

 

 

 

 

 

 

Debenture Application & Allotment A/c

Dr.

 

2,75,000

 

 

    To 8% Debentures A/c

 

 

 

2,50,000

 

    To Security Premium Reserve A/c

 

 

 

25,000

 

(Conversion of application money to Debentures A/c)

 

 

 

 

 

 

 

 

 

 

 

8% Debentures A/c

Dr.

 

2,50,000

 

 

    To Debenture holders’  A/c

 

 

 

2,50,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

 

Debenture holders’  A/c

Dr.

 

2,50,000

 

 

    To Bank A/c

 

 

 

2,50,000

 

(Debentures redeemed at par)

 

 

 

 

 

 

 

 

 

 

(2)

Bank A/c

Dr.

 

2,75,000

 

 

    To Debenture Application & Allotment A/c

 

 

 

2,75,000

 

(Application money received on issue of debentures)

 

 

 

 

 

 

 

 

 

 

 

Debenture Application & Allotment A/c

Dr.

 

2,75,000

 

 

Loss on issue of Debentures A/c

Dr.

 

25,000

 

 

    To 7% Debentures A/c

 

 

 

2,50,000

 

    To Security Premium Reserve A/c

 

 

 

25,000

 

    To Premium on Redemption of Debentures A/c

 

 

 

25,000

 

(Conversion of application money to Debentures A/c)

 

 

 

 

 

 

 

 

 

 

 

8% Debentures A/c

Dr.

 

2,50,000

 

 

Premium on Redemption of Debentures A/c

Dr.

 

25,000

 

 

    To Debenture holders’ A/c

 

 

 

2,75,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

 

Debenture holders’ A/c

Dr.

 

2,75,000

 

 

    To  Bank A/c

 

 

 

2,75,000

 

(Debentures redeemed at premium)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Page No 8.34:

Answer:

Books of Wye Ltd.

Journal

Date.

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

31/3/17

Statement of Profit or Loss

Dr.

 

1,00,000

 

 

To Debenture Redemption Reserve A/c

 

 

1,00,000

 

(Surplus transferred to Debenture Redemption Reserve)

 

 

 

 

 

 

 

 

30/4/17 Debenture Redemption Investment A/c                          Dr.   45,000  
    To Bank A/c     45,000
  (Investment is made in specified securities equal to 15% of the value of debentures redeemed)      
         

31/3/18**

9% Debentures A/c

Dr.

 

3,00,000

 

 

To Debentureholders’ A/c

 

 

3,00,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

31/3/18** Bank  A/c                                                              Dr.   45,000  
    To Debenture Redemption Investment A/c     45,000
  (Investment made in specified securities is now encashed)      
         

31/3/18**

Debentureholders’ A/c

Dr.

 

3,00,000

 

 

To Bank A/c

 

 

3,00,000

 

(Amount due to debentureholders paid)

 

 

 

 

 

 

 

 

Working Notes:


** The date of redemption has been assumed to be March 31, 2018 in order to maintain consistency with the guidelines issued by Ministry of Corporate Affairs which requires that every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and investment if passed in any of the year then redemption would take place in the following year.

Note:
1. Here, the entry for transferring the amount of DRR to General Reserve A/c has not been passed, since the company has not fully redeemed all its debentures. It is still left with Rs 3,00,000 of debentures. Once these debentures are redeemed, the amount of DRR can be transferred to General Reserve A/c.
2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
2018          
Mar. 31 Debenture Interest A/c Dr.   54,000  
    To Debentureholders’ A/c       54,000
  (Interest on 9% debentures due for 12 months)        
           
Mar.31 Debentureholders’ A/c Dr.   54,000  
    To Bank A/c       54,000
  (Payment of interest to debentureholders’)        
           
Mar. 31 Statement of Profit and Loss Dr.   54,000  
    To Debenture Interest A/c       54,000
  (Transfer of debenture interest to Statement of Profit and Loss)        

Page No 8.34:

Answer:

Books of India Textiles Corporation Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2015

Statement of Profit and Loss

Dr.

 

9,50,000

 

March 31

To Debenture Redemption Reserve A/c

 

 

9,50,000

 

(Profit transferred to Debenture Redemption Reserve)

 

 

 

 

 

 

 

 

April 30 Debenture Redemption Investment A/c Dr.   7,50,000  
    To Bank A/c       7,50,000
  (Investment is made in specified securities equal to the 15% value of debentures redeemed)        
2016          

March 31

9% Debentures A/c

Dr.

 

50,00,000

 

 

To Debentureholders’ A/c

 

 

50,00,000

 

(Debentures due for redemption)

 

 

 

 

 

 

 

 

March 31 Bank A/c Dr.   7,50,000  
   To Debenture Redemption Investment A/c       7,50,000
  (Investment made in securities is now encashed)        
           

March 31

Debentureholders’ A/c

Dr.

 

50,00,000

 

 

To Bank A/c

 

 

50,00,000

 

(Payment made to debentureholders)

 

 

 

 

 

 

 

 

March 31

Debenture Redemption Reserve A/c

Dr.

 

12,50,000

 

 

To General Reserve A/c

 

 

12,50,000

 

(Debenture Redemption Reserve transferred to General Reserve)

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of amount transferred to DRR

WN2: Calculation of amount Invested in Specified Securities



*As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.

Note: Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date Particulars L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2015 & 2016          
Mar. 31 Debenture Interest A/c Dr.   4,50,000  
    To Debentureholders’ A/c       4,50,000
  (Interest on 9% debentures due)        
           
Mar. 31 Debentureholders’ A/c Dr.   4,50,000  
    To Bank A/c       4,50,000
  (Payment of interest to debentureholders’)        
           
Mar. 31 Statement of Profit and Loss Dr.   4,50,000  
    To Debenture Interest A/c       4,50,000
  (Transfer of debenture interest to Statement of Profit and Loss)        

Page No 8.34:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2013

 

 

 

 

 

Apr.01

Bank A/c

Dr.

 

40,00,000

 

 

    To Debenture Application & Allotment A/c

 

 

 

40,00,000

 

(Application money received on issue of debentures)

 

 

 

 

 

 

 

 

 

 

Apr.01

Debenture Application & Allotment A/c

Dr.

 

40,00,000

 

 

Loss on issue of Debentures A/c

Dr.

 

2,00,000

 

 

   To 8% Debentures A/c

 

 

 

40,00,000

 

   To Premium on Redemption of Debentures A/c

 

 

 

2,00,000

 

(Conversion of application money to Debentures A/c)

 

 

 

 

2016

 

 

 

 

 

Mar.31

Surplus i.e. Balance in statement of Profit & Loss

Dr.

 

5,00,000

 

 

  To Debentures Redemption Reserve  A/c

 

 

 

5,00,000

 

(Amount transferred to Debentures Redemption Reserve)

 

 

 

 

2017

 

 

 

 

 

Mar.31

Surplus i.e. Balance in statement of Profit & Loss

Dr.

 

5,00,000

 

 

  To Debentures Redemption Reserve  A/c

 

 

 

5,00,000

 

(Amount transferred to Debentures Redemption Reserve)

 

 

 

 

 

 

 

 

 

 

Apr.30

Debenture Redemption Investment A/c

Dr.

 

6,00,000

 

 

  To Bank A/c

 

 

 

6,00,000

 

(Amount invested in specified security)

 

 

 

 

 

 

 

 

 

 

June 30

Bank A/c

Dr.

 

6,00,000

 

 

  To Debenture Redemption Investment A/c

 

 

 

6,00,000

 

(Debenture Redemption Investment realized)

 

 

 

 

 

 

 

 

 

 

June 30

8% Debenture A/c

Dr.

 

40,00,000

 

 

Premium on Redemption of Debentures A/c

Dr.

 

2,00,000

 

 

    To Debenture holder’s  A/c

 

 

 

42,00,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

June 30

Debenture holder’s  A/c

Dr.

 

42,00,000

 

 

  To  Bank A/c

 

 

 

42,00,000

 

(Debentures redeemed at premium)

 

 

 

 

 

 

 

 

 

June 30

Debentures Redemption Reserve A/c                         Dr.    

 

10,00,000

 

 

    To General Reserve A/c

 

 

10,00,000

 

(Debentures Redemption Reserve transferred to General Reserve)

 

 

 

 

 

 

 

 

 

Working Note:


Amount Required to be transferred to Debenture  Redemption  Investment                                             =15% of Face value of Debentures                                 =15% of Rs 40,00,000=Rs 6,00,000Amount Required to be transferred to Debentures  Redemption  Reserve  =25% of Face value of Debentures               =25% of Rs 40,00,000=Rs 10,00,000

Page No 8.34:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2015

 

 

 

 

 

April 1

Bank A/c

Dr.

 

5,00,000

 

 

    To Debenture Application & Allotment A/c

 

 

 

5,00,000

 

(Application Money received on issue of debentures)

 

 

 

 

 

 

 

 

 

 

April 1

Debenture Application & Allotment A/c

Dr.

 

5,00,000

 

 

      To 9% Debentures A/c

 

 

 

5,00,000

 

(Conversion of application money to Debentures A/c)

 

 

 

 

 

 

 

 

 

 

April 1

Surplus,i.e.,Balance in statement of Profit & Loss A/c

Dr.

 

1,25,000

 

 

      To Debentures Redemption Reserve  A/c

 

 

 

1,25,000

 

(Amount transferred to Debentures Redemption Reserve  )

 

 

 

 

 

 

 

 

 

 

April 30

Debenture Redemption Investment A/c

Dr.

 

75,000

 

 

       To Bank A/c

 

 

 

75,000

 

(Amount invested in fixed deposit of Canara Bank)

 

 

 

 

2016          
March 31 Debenture Interest A/c Dr.   45,000  
        To Debentureholders' A/c       45,000
  (Interest on debenture payable)        

 

 

 

 

 

 

March 31

Bank A/c

Dr.

 

80,500

 

 

      To Debenture Redemption Investment A/c

 

 

 

75,000

        To Interest Earned       5,500

 

(Debenture Redemption Investment realized)

 

 

 

 

 

 

 

 

 

 

March 31

9% Debenture A/c

Dr.

 

5,00,000

 

 

    To Debenture holder’s  A/c

 

 

 

5,00,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

March 31

Debenture holder’s  A/c

Dr.

 

5,45,000

 

 

  To  Bank A/c

 

 

 

5,45,000

 

(Debentures redeemed at par)

 

 

 

 

 

 

 

 

 

March 31

Debentures Redemption Reserve A/c                  

Dr.

 

1,25,000

 

 

    To General Reserve A/c

 

 

1,25,000

 

(Debentures Redemption Reserve transferred to General Reserve)

 

 

 

 

 

 

 

 

 

Working Note:

Amount Required to be transferred to Debenture  Redemption  Investment =15% of Face value of Debentures                     =15% of Rs 5,00,000=Rs 75,000Amount Required to be transferred to Debentures  Redemption  Reserve  =25% of Face value of Debentures                    =25% of Rs 5,00,000=Rs 1,25,000

Page No 8.34:

Answer:

Journal 

In the Books of Godrej Ltd.

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2016

 

 

 

 

 

Mar. 31

Statement of Profit and Loss

Dr.

 

1,50,000

 

 

To Debenture Redemption Reserve A/c

 

 

 

1,50,000

 

(DRR created)

 

 

 

 

 

 

 

 

 

 

Apr. 01

Debenture Redemption Investment A/c

Dr.

 

3,00,000

 

 

To Bank A/c

 

 

 

3,00,000

 

(Investment made in specified securities)

 

 

 

 

2017

 

 

 

 

 

Mar. 31

7% Debentures A/c

Dr.

 

20,00,000

 

 

To Debentureholders’ A/c

 

 

 

20,00,000

 

(Amount on 7% debentures due)

 

 

 

 

           

Mar. 31

Bank A/c (3,00,000 + 16,200)

Dr.

 

3,16,200

 

  Tax Payable A/c Dr.   1,800  
     To Interest on Debenture Redemption Investment A/c       18,000
     To Debenture Redemeption Investment A/c       3,00,000
  (Investment encashed and interest received)        
           

Mar. 31

Debentureholders' A/c

Dr.

 

20,00,000

 

 

To Bank A/c

 

 

 

20,00,000

 

(Payment made on redemption of debentures)

 

 

 

 

 

 

 

 

 

 

Mar. 31

Debenture Redemption Reserve A/c

Dr.

 

5,00,000

 

 

To General Reserve A/c

 

 

 

5,00,000

 

(Transfer of Debenture Redemption Reserve to General Reserve)

 

 

 

 

 

 

 

 

 


Working Notes:

Calculation of amount transferred to DRR

Amount of DRR (25% of Debentures) = 20,00,000 × 25100=5,00,000Less: Amount already exists in DRR                                         3,50,000          DRR to be created for redemption                                  1,50,000 


Note:

1. The year of transfer to DRR and investment has been assumed to be in 2014 in order to maintain consistency with the guidelines issued by Ministry of Corporate Affairs which requires that every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and investment if passed in any of the year then redemption would take place in the following year.

2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2016 & 2017
         
Mar. 31
Debenture Interest A/c
Dr.
 
1,40,000
 
 
  To Debentureholders’ A/c
     
1,40,000
 
(Interest on 7% debentures due)
       
           
Mar. 31
Debentureholders’ A/c
Dr.
 
1,40,000
 
 
  To Bank A/c
     
1,40,000
 
(Payment of interest to debentureholders’)
       
           
Mar. 31
Statement of Profit and Loss
Dr.
 
1,40,000
 
 
  To Debenture Interest A/c
     
1,40,000
 
(Transfer of debenture interest to Statement of Profit and Loss)
       
           

Page No 8.34:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2015

 

 

 

 

 

July 01

Bank A/c

Dr.

 

10,50,000

 

 

    To Debenture Application & Allotment A/c

 

 

 

10,50,000

 

(Application received for issue of debentures)

 

 

 

 

 

 

 

 

 

 

July 01

Debenture Application & Allotment A/c

Dr.

 

10,50,000

 

 

   To 8% Debentures A/c

 

 

 

10,00,000

 

     To Security Premium Reserve A/c

 

 

 

50,000

 

(Conversion of application money to Debentures A/c)

 

 

 

 

2016

 

 

 

 

 

Mar.31

Surplus i.e., Balance in statement of Profit & Loss

Dr.

 

2,50,000

 

 

     To Debentures Redemption Reserve  A/c

 

 

 

2,50,000

 

(Amount transferred to Debentures Redemption Reserve  )

 

 

 

 

 

 

 

 

 

 

Apr.01

Debenture Redemption Investment A/c

Dr.

 

1,50,000

 

 

      To Bank A/c

 

 

 

1,50,000

 

(Amount invested in fixed deposit with Axis bank)

 

 

 

 

2017

 

 

 

 

 

Mar.31

Bank A/c

Dr.

 

1,50,000

 

 

      To Debenture Redemption Investment A/c

 

 

 

1,50,000

 

(Debenture Redemption Investment realized)

 

 

 

 

 

 

 

 

 

 

Mar.31

Debentures Interest A/c

Dr.

 

80,000

 

 

    To Debentures’ holders A/c

 

 

 

72,000

 

    To TDS Payable A/c

 

 

 

8,000

 

(Interest Due on debentures)

 

 

 

 

 

 

 

 

 

 

Mar.31

 Debentures’ holders A/c

Dr.

 

72,000

 

 

 TDS Payable A/c

Dr.

 

8,000

 

 

     To Bank A/c

 

 

 

80,000

 

(Interest Paid to Debentures’ holders)

 

 

 

 

 

 

 

 

 

 

Mar.31

Bank A/c

Dr.

 

6,750

 

 

TDS Collected A/c

Dr.

 

750

 

 

     To Interest on Debenture Redemption Investment

 

 

 

7,500

 

(Interest received from Bank)

 

 

 

 

 

 

 

 

 

 

Mar.31

8% Debenture A/c

Dr.

 

10,00,000

 

 

    To Debenture holder’s  A/c

 

 

 

10,00,000

 

(Debenture due for redemption)

 

 

 

 

 

 

 

 

 

 

Mar.31

Debenture holder’s  A/c

Dr.

 

10,00,000

 

 

  To  Bank A/c

 

 

 

10,00,000

 

(Debentures redeemed)

 

 

 

 

 

 

 

 

 

Mar.31

Debentures Redemption Reserve A/c                            Dr.    

 

2,50,000

 

 

    To General Reserve A/c

 

 

2,50,000

 

(Debentures Redemption Reserve transferred to General Reserve)