Tulip Ltd issue Rs 400000 9% Debentures of Rs 100 each on April 1, 2011 at a - Accountancy - Issue and Redemption of Debentures

Question

Tulip Ltd issue Rs 400000 9% Debentures of Rs 100 each on April 1,
2011 at a premium of 6%, redeemable at a premium of 10% on 31st
March 2015, Assume that required investment was made in 10%
Goverment Securities on April 30 of the financial year in which
redemption is due Debentures were redeemed on the due date
Pass journal entries at the time of Issue and Redemption of
Debentures

Neha Chopra · Accepted Answer

Dear Student,

Journal entries are as follows:

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

01 Apr
2011
Bank A/c
(4,000*106)
Dr
424,000

To 9% Debentures
Application & Allotment A/c

424,000

(9% debentures issued @
6% premium)

9% Debenture Application
& Allotment A/c
Dr
424,000

Loss on Redemption of
Debentures A/c (4,000*100*10%)

40,000

To 9% Debentures A/c
(4,000*100)

400,000

To Securities Premium A/c
(4,000*6)

24,000

To Premium on redemption
of debentures A/c

40,000

(Debentures allotment
amount transferred to Debentures A/c)

30 Apr
2014
Debenture Investment in
10% Government Securities A/c (4,00,000*15%)
Dr
60,000

To Bank
A/c

60,000

(15% of value of
debentures to be redeemed invested in Govt
securities)

31 Mar
2015
9% Debentures
A/c
Dr
400,000

Premium on redemption of
debentures A/c

40,000

To Debenture holders
A/c

440,000

(Redemption of debentures
due)

Debenture holders
A/c
Dr
440,000

To Bank
A/c

440,000

(Debentures
redeemed)

Regards,

Date	Particulars	LF	Amount (in Rs)	Amount (in Rs)
01 Apr 2011	Bank A/c (4,000*106)	Dr	424,000
	To 9% Debentures Application & Allotment A/c			424,000
	(9% debentures issued @ 6% premium)

	9% Debenture Application & Allotment A/c	Dr	424,000
	Loss on Redemption of Debentures A/c (4,00010010%)		40,000
	To 9% Debentures A/c (4,000*100)			400,000
	To Securities Premium A/c (4,000*6)			24,000
	To Premium on redemption of debentures A/c			40,000
	(Debentures allotment amount transferred to Debentures A/c)

30 Apr 2014	Debenture Investment in 10% Government Securities A/c (4,00,000*15%)	Dr	60,000
	To Bank A/c			60,000
	(15% of value of debentures to be redeemed invested in Govt securities)

31 Mar 2015	9% Debentures A/c	Dr	400,000
	Premium on redemption of debentures A/c		40,000
	To Debenture holders A/c			440,000
	(Redemption of debentures due)

	Debenture holders A/c	Dr	440,000
	To Bank A/c			440,000
	(Debentures redeemed)