14th Q14 Ruchi Ltd issued 42,000, 7% debentures of Rs 100 each on 1st April ,2011, - Accountancy - Issue and Redemption of Debentures

Question

14th

Q14 Ruchi Ltd issued 42,000, 7% debentures of Rs 100 each on
1st April ,2011, redeemable at a premium of 8% on
31st March 2015 The company decided to create required
debenture Redemption Reserve on 31st March 2014 The
company invested the funds as required by law in a fixed deposit
with State Bank of India on 1st April 2014 earning
interest @ 10% per annum Tax was deducted at source by the bank on
interest @ 10% per annum Pass necessary Journal Entries regarding
issue and redemption of debentures

Neha Chopra · Accepted Answer

Dear
Student,

Date
Particulars
LF
Amount (in
Rs)
Amount (in
Rs)

2011, Apr
01
Bank A/c
(42,000*100)
Dr
4,200,000

To 7% Debenture
Application & Allotment A/c

4,200,000

(Debenture issued and
amount received)

7% Debenture Application
& Allotment A/c
Dr
4,200,000

Loss on Issue of
Debentures A/c (42,00,000*8%)
Dr
336,000

To 7% Debentures
A/c

4,200,000

To Premium on redemption
of debentures A/c

336,000

(Debenture money
transferred and loss booked for premium on
redemption)

2014 , Mar
31
Statement of Profit &
Loss A/c (42,00,000*25%)
Dr
1,050,000

To Debenture Redemption
Reserve A/c

1,050,000

(DRR created out of
profits)

2014 , Apr
01
10% Fixed Deposit A/c
(DRI) (42,00,000*15%)
Dr
630,000

To Bank
A/c

630,000

(Investment of 15% of
debenture value in FD)

2015,Mar
31
7% Debenture
A/c
Dr
4,200,000

Premium on redemption of
debentures A/c

336,000

To Bank
A/c

4,536,000

(Redemption of
debentures)

Debenture Redemption
Reserve A/c
Dr
1,050,000

To General Reserve
A/c

1,050,000

(Amount in DRR
transferred to General Reserve)

Regards,

Date	Particulars	LF	Amount (in Rs)	Amount (in Rs)
2011, Apr 01	Bank A/c (42,000*100)	Dr	4,200,000
	To 7% Debenture Application & Allotment A/c			4,200,000
	(Debenture issued and amount received)

	7% Debenture Application & Allotment A/c	Dr	4,200,000
	Loss on Issue of Debentures A/c (42,00,000*8%)	Dr	336,000
	To 7% Debentures A/c			4,200,000
	To Premium on redemption of debentures A/c			336,000
	(Debenture money transferred and loss booked for premium on redemption)

2014 , Mar 31	Statement of Profit & Loss A/c (42,00,000*25%)	Dr	1,050,000
	To Debenture Redemption Reserve A/c			1,050,000
	(DRR created out of profits)

2014 , Apr 01	10% Fixed Deposit A/c (DRI) (42,00,000*15%)	Dr	630,000
	To Bank A/c			630,000
	(Investment of 15% of debenture value in FD)

2015,Mar 31	7% Debenture A/c	Dr	4,200,000
	Premium on redemption of debentures A/c		336,000
	To Bank A/c			4,536,000
	(Redemption of debentures)

	Debenture Redemption Reserve A/c	Dr	1,050,000
	To General Reserve A/c			1,050,000
	(Amount in DRR transferred to General Reserve)