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) |