Q6 please give answer
 
Q.6  Gati Ltd., has issued 30,000, 8% Debentures of Rs 100 each of which one-third is due for redemption on March 31st 2015. The company has in its Debenture redemption Reserve Account a balance of Rs. 3,80,000. Required Investment is made in fixed deposit on 30th April 2014 bearing interest @ 6% p.a. Record the necessary journal entries for the Redemption of Debentures. 

[Ans.  Debenture Redemption Investment Rs. 1,50,000. Interest earned on fixed deposit Rs. 8,250. Amount transferred to Debenture Redemption Reserve  Rs. 3,70,000.]

Hint :  Debenture Redemption Reserve will not be transferred to General Reserve A/c since all debentures are not redeemed.

Dear Student,

Journal entries for Redemption of debentures of Gati Ltd.

 
Date  Particulars  LF  Amount (in Rs)  Amount (in Rs)
 Apr 30, 2014  Debenture Investment A/c (3,00,000*1/3*15%)  Dr  1,50,000  
       To Bank A/c      1,50,000
   (15% investment made one year before redemption of debentures)      
         
 Mar 31, 2015  Statement of Profit & Loss A/c (30,000*100*25%-3,80,000)  Dr  3,70,000  
        To Debenture Redemption Reserve A/c      3,70,000
         
   Interest on Fixed deposits A/c (1,50,000*6%*11/12)  Dr  8,250  
       To Statement of Profit & Loss       8,250
   (Interest earned for 9 months)      

Regards,

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