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:
Question 1:
Answer:
Page No 8.33:
Question 2:
Answer:
Page No 8.33:
Question 3:
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:
Question 4:
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.
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:
Question 5:
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) |
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:
Question 6:
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) |
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:
Question 7:
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.
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:
Question 8:
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) |
|
|
|
|
|
|
|
|
|
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:
Question 9:
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
Question 10:
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) |
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:
Question 11:
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) |
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:
Page No 8.34:
Question 12:
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:
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:
Page No 8.34:
Question 13:
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:
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
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:
Question 14:
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
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)
|
|||||
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
Page No 8.34:
Question 15:
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
Answer:
Books of Apollo Ltd. |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2010 |
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
21,00,000 |
|
|
To 8% Debenture Application A/c |
|
|
21,00,000 |
|
|
(Debenture application money received) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Application A/c |
Dr. |
|
21,00,000 |
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
1,68,000 |
|
|
To 8% Debentures A/c |
|
|
21,00,000 |
|
|
To Premium on Redemption A/c |
|
|
1,68,000 |
|
|
(2,10,000 8% Debentures of Rs 10 each issued with the term repayable at 8% Premium) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
Mach 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
April 30 | Debenture Redemption Investment A/c | Dr. | 3,15,000 | ||
To Bank A/c | 3,15,000 | ||||
(Investment is made in government securities equal to 15% of the value of debentures redeemed) | |||||
2017 | |||||
June 30 |
8% Debenture A/c |
Dr. |
|
21,00,000 |
|
|
Premium on Redemption Reserve A/c |
Dr. |
|
1,68,000 |
|
|
To Debentureholders’ A/c |
|
|
22,68,000 |
|
|
(Debenture due for redemption along with premium) |
|
|
|
|
|
|
|
|
|
|
Bank A/c | Dr. | 3,15,000 | |||
To Debenture Redemption Investment A/c | 3,15,000 | ||||
(Investment made in specifed securities now encashed) | |||||
|
Debentureholders’ A/c |
Dr. |
|
22,68,000 |
|
|
To Bank A/c |
|
|
22,68,000 |
|
|
(Payment made to debentureholders) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Redemption Reserve A/c |
Dr. |
|
5,25,000 |
|
|
To General Reserve A/c |
|
|
5,25,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
Working Note:
Calculation of Amount transferred to DRR
As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 21,00,000 are to be redeemed, so, the amount of DRR will be:
Note:
1. 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.
Page No 8.34:
Question 16:
Books of Apollo Ltd. |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2010 |
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
21,00,000 |
|
|
To 8% Debenture Application A/c |
|
|
21,00,000 |
|
|
(Debenture application money received) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Application A/c |
Dr. |
|
21,00,000 |
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
1,68,000 |
|
|
To 8% Debentures A/c |
|
|
21,00,000 |
|
|
To Premium on Redemption A/c |
|
|
1,68,000 |
|
|
(2,10,000 8% Debentures of Rs 10 each issued with the term repayable at 8% Premium) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
Mach 31 |
Statement of Profit and Loss |
Dr. |
|
1,75,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
1,75,000 |
|
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
April 30 | Debenture Redemption Investment A/c | Dr. | 3,15,000 | ||
To Bank A/c | 3,15,000 | ||||
(Investment is made in government securities equal to 15% of the value of debentures redeemed) | |||||
2017 | |||||
June 30 |
8% Debenture A/c |
Dr. |
|
21,00,000 |
|
|
Premium on Redemption Reserve A/c |
Dr. |
|
1,68,000 |
|
|
To Debentureholders’ A/c |
|
|
22,68,000 |
|
|
(Debenture due for redemption along with premium) |
|
|
|
|
|
|
|
|
|
|
Bank A/c | Dr. | 3,15,000 | |||
To Debenture Redemption Investment A/c | 3,15,000 | ||||
(Investment made in specifed securities now encashed) | |||||
|
Debentureholders’ A/c |
Dr. |
|
22,68,000 |
|
|
To Bank A/c |
|
|
22,68,000 |
|
|
(Payment made to debentureholders) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Redemption Reserve A/c |
Dr. |
|
5,25,000 |
|
|
To General Reserve A/c |
|
|
5,25,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
Working Note:
Calculation of Amount transferred to DRR
As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 21,00,000 are to be redeemed, so, the amount of DRR will be:
Note:
1. 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.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
2014 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2016 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss A/c |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debentures Interest A/c |
Dr. |
|
45,000 |
|
|
To Debentures’ holders A/c |
|
|
|
40,500 |
|
To TDS Payable A/c |
|
|
|
4,500 |
|
(Interest Due on Debentures) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debentures’ holders A/c |
Dr. |
|
40,500 |
|
|
TDS Payable A/c |
Dr. |
|
4,500 |
|
|
To Bank A/c |
|
|
|
45,000 |
|
(Interest Paid to Debentures’ holders) |
|
|
|
|
|
|
|
|
|
|
Apr.30 |
Debenture Redemption Investment A/c |
Dr. |
|
1,12,500 |
|
|
To Bank A/c |
|
|
|
1,12,500 |
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Bank A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
1,12,500 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures Interest A/c |
Dr. |
|
33,750 |
|
|
To Debentures’ holders A/c |
|
|
|
30,375 |
|
To TDS Payable A/c |
|
|
|
3,375 |
|
(Interest Due on Debentures) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures’ holders A/c |
Dr. |
|
30,375 |
|
|
TDS Payable A/c |
Dr. |
|
3,375 |
|
|
To Bank A/c |
|
|
|
33,750 |
|
(Interest Paid to Debenture Holders) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Bank A/c |
Dr. |
|
3,375 |
|
|
TDS Collected A/c |
Dr. |
|
375 |
|
|
To Interest on Debenture Redemption Investment |
|
|
|
3,750 |
|
(Interest received) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
6% Debenture A/c |
Dr. |
|
7,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture holder’s A/c |
|
|
|
8,62,500 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debenture holder’s A/c |
Dr. |
|
8,62,500 |
|
|
To Bank A/c |
|
|
|
8,62,500 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures Redemption Reserve A/c Dr. |
|
1,87,500 |
|
|
|
To General Reserve A/c |
|
|
1,87,500 |
|
|
(Debentures Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 8.34:
Question 17:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
2014 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2016 |
|
|
|
|
|
Mar.31 |
Surplus i.e. Balance in statement of Profit & Loss A/c |
Dr. |
|
62,500 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
62,500 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debentures Interest A/c |
Dr. |
|
45,000 |
|
|
To Debentures’ holders A/c |
|
|
|
40,500 |
|
To TDS Payable A/c |
|
|
|
4,500 |
|
(Interest Due on Debentures) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debentures’ holders A/c |
Dr. |
|
40,500 |
|
|
TDS Payable A/c |
Dr. |
|
4,500 |
|
|
To Bank A/c |
|
|
|
45,000 |
|
(Interest Paid to Debentures’ holders) |
|
|
|
|
|
|
|
|
|
|
Apr.30 |
Debenture Redemption Investment A/c |
Dr. |
|
1,12,500 |
|
|
To Bank A/c |
|
|
|
1,12,500 |
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Bank A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
1,12,500 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures Interest A/c |
Dr. |
|
33,750 |
|
|
To Debentures’ holders A/c |
|
|
|
30,375 |
|
To TDS Payable A/c |
|
|
|
3,375 |
|
(Interest Due on Debentures) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures’ holders A/c |
Dr. |
|
30,375 |
|
|
TDS Payable A/c |
Dr. |
|
3,375 |
|
|
To Bank A/c |
|
|
|
33,750 |
|
(Interest Paid to Debenture Holders) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Bank A/c |
Dr. |
|
3,375 |
|
|
TDS Collected A/c |
Dr. |
|
375 |
|
|
To Interest on Debenture Redemption Investment |
|
|
|
3,750 |
|
(Interest received) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
6% Debenture A/c |
Dr. |
|
7,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture holder’s A/c |
|
|
|
8,62,500 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debenture holder’s A/c |
Dr. |
|
8,62,500 |
|
|
To Bank A/c |
|
|
|
8,62,500 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Dec.31 |
Debentures Redemption Reserve A/c Dr. |
|
1,87,500 |
|
|
|
To General Reserve A/c |
|
|
1,87,500 |
|
|
(Debentures Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
Working Note:
Answer:
Books of JB Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2014 |
|
|
|
|
|
April 01 |
Bank A/c |
Dr. |
|
10,40,000 |
|
|
To 6% Debenture Application A/c |
|
|
10,40,000 |
|
|
(Debenture Application money received) |
|
|
|
|
|
|
|
|
|
|
April 01 |
6% Debenture Application A/c |
Dr. |
|
10,40,000 |
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
50,000 |
|
|
To 6% Debentures A/c |
|
|
10,00,000 |
|
|
To Securities Premium A/c |
|
|
40,000 |
|
|
To Premium on Redemption A/c |
|
|
50,000 |
|
|
(Debentures of Rs 10,00,000 issued at 4% Premium with the term redeemable at 5% Premium) |
|
|
|
|
2017 |
|
|
|
|
|
Mar. 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c* |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
Apr. 30 | Debenture Redemption Investment A/c** | Dr. | 1,50,000 | ||
To Bank A/c | 1,50,000 | ||||
(Investment is made in government securities equal to 15% of the value of debentures redeemed) | |||||
2018 | |||||
March 31 |
6% Debentures A/c |
Dr. |
|
10,00,000 |
|
|
Premium on Redemption A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
10,50,000 |
|
|
(Debentures due for redemption along with the premium) |
|
|
|
|
|
|
|
|
|
|
Bank A/c | Dr. | 1,50,000 | |||
To Debenture Redemption Investment A/c | 1,50,000 | ||||
(Investment made in securities is now encashed) | |||||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,50,000 |
|
|
To Bank A/c |
|
|
10,50,000 |
|
|
(Amount paid to Debentureholders) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
2,50,000 |
|
|
To General Reserve A/c |
|
|
2,50,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
*As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 10,00,000 are to be redeemed, so, the amount of DRR will be:
However, it purely depends upon a company and its discretion to transfer more amount to DRR than the prescribed amount of 25% in the case of companies for whom it is mandatory to create DRR out of profits. In this case, as nothing explicit has been specified about company's discretion, so amount equivalent to 25% of the nominal value of the redeemable debentures has been transferred to DRR similar to the earlier questions.
**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 to 2018 | |||||
Mar. 31 | Debenture Interest A/c | Dr. | 60,000 | ||
To Debentureholders’ A/c | 60,000 | ||||
(Interest on 6% debentures due) | |||||
Mar. 31 | Debentureholders’ A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Payment of interest to debentureholders’) | |||||
Mar. 31 | Statement of Profit and Loss | Dr. | 60,000 | ||
To Debenture Interest A/c | 60,000 | ||||
(Transfer of debenture interest to Statement of Profit and Loss) |
Page No 8.34:
Question 18:
Books of JB Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2014 |
|
|
|
|
|
April 01 |
Bank A/c |
Dr. |
|
10,40,000 |
|
|
To 6% Debenture Application A/c |
|
|
10,40,000 |
|
|
(Debenture Application money received) |
|
|
|
|
|
|
|
|
|
|
April 01 |
6% Debenture Application A/c |
Dr. |
|
10,40,000 |
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
50,000 |
|
|
To 6% Debentures A/c |
|
|
10,00,000 |
|
|
To Securities Premium A/c |
|
|
40,000 |
|
|
To Premium on Redemption A/c |
|
|
50,000 |
|
|
(Debentures of Rs 10,00,000 issued at 4% Premium with the term redeemable at 5% Premium) |
|
|
|
|
2017 |
|
|
|
|
|
Mar. 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c* |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
Apr. 30 | Debenture Redemption Investment A/c** | Dr. | 1,50,000 | ||
To Bank A/c | 1,50,000 | ||||
(Investment is made in government securities equal to 15% of the value of debentures redeemed) | |||||
2018 | |||||
March 31 |
6% Debentures A/c |
Dr. |
|
10,00,000 |
|
|
Premium on Redemption A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
10,50,000 |
|
|
(Debentures due for redemption along with the premium) |
|
|
|
|
|
|
|
|
|
|
Bank A/c | Dr. | 1,50,000 | |||
To Debenture Redemption Investment A/c | 1,50,000 | ||||
(Investment made in securities is now encashed) | |||||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,50,000 |
|
|
To Bank A/c |
|
|
10,50,000 |
|
|
(Amount paid to Debentureholders) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
2,50,000 |
|
|
To General Reserve A/c |
|
|
2,50,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
*As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 10,00,000 are to be redeemed, so, the amount of DRR will be:
However, it purely depends upon a company and its discretion to transfer more amount to DRR than the prescribed amount of 25% in the case of companies for whom it is mandatory to create DRR out of profits. In this case, as nothing explicit has been specified about company's discretion, so amount equivalent to 25% of the nominal value of the redeemable debentures has been transferred to DRR similar to the earlier questions.
**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 to 2018 | |||||
Mar. 31 | Debenture Interest A/c | Dr. | 60,000 | ||
To Debentureholders’ A/c | 60,000 | ||||
(Interest on 6% debentures due) | |||||
Mar. 31 | Debentureholders’ A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Payment of interest to debentureholders’) | |||||
Mar. 31 | Statement of Profit and Loss | Dr. | 60,000 | ||
To Debenture Interest A/c | 60,000 | ||||
(Transfer of debenture interest to Statement of Profit and Loss) |
Answer:
Journal
|
|||||
Date
|
Particulars
|
L.F.
|
Debit
Amount
(Rs)
|
Credit
Amount
(Rs)
|
|
2014 | |||||
March 31
|
Statement of Profit and Loss
|
Dr.
|
|
1,75,000
|
|
To Debenture Redemption Reserve A/c | 1,75,000 | ||||
(Surplus amount is transferred to DRR) | |||||
April 30
|
Debenture Redemption Investment A/c | Dr. | 2,25,000 | ||
To Bank A/c | 2,25,000 | ||||
(Investment is made in specified securities equal to 15% of the value of debentures redeemed) | |||||
2015 | |||||
March 31
|
10% Debentures A/c
|
Dr.
|
|
15,00,000
|
|
|
To Debentureholders A/c
|
|
|
|
15,00,000
|
|
(10% Debentures due for redemption)
|
|
|
|
|
|
|
|
|
|
|
March 31
|
Bank A/c | Dr. | 2,25,000 | ||
To Debenture Redemption Investment A/c | 2,25,000 | ||||
(Investment made in specified securities, now encashed) | |||||
March 31
|
Debentureholders' A/c
|
Dr.
|
|
15,00,000
|
|
|
To Bank A/c
|
|
|
|
15,00,000
|
|
(Amount paid to debentureholders)
|
|
|
|
|
|
|
|
|
|
|
March 31
|
Debenture Redemption Reserve A/c
|
Dr.
|
|
3,75,000
|
|
|
To General Reserve A/c
|
|
|
|
3,75,000
|
|
(DRR amount is transferred to General Reserve)
|
|
|
|
|
|
|
|
|
|
Working Notes:
*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 a year before redemption 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) |
|
|
|
|
|
|
|
Mar. 31
|
Debenture Interest A/c
|
Dr.
|
|
1,50,000
|
|
|
To Debentureholders’ A/c
|
|
|
|
1,50,000
|
|
(Interest on 10% debentures due)
|
|
|
|
|
|
|
|
|
|
|
Mar. 31
|
Debentureholders’ A/c
|
Dr.
|
|
1,50,000
|
|
|
To Bank A/c
|
|
|
|
1,50,000
|
|
(Payment of interest to debentureholders’)
|
|
|
|
|
|
|
|
|
|
|
Mar. 31
|
Statement of Profit and Loss
|
Dr.
|
|
1,50,000
|
|
|
To Debenture Interest A/c
|
|
|
|
1,50,000
|
|
(Transfer of debenture interest to Statement of Profit and Loss)
|
|
|
|
Page No 8.35:
Question 19:
Journal
|
|||||
Date
|
Particulars
|
L.F.
|
Debit
Amount
(Rs)
|
Credit
Amount
(Rs)
|
|
2014 | |||||
March 31
|
Statement of Profit and Loss
|
Dr.
|
|
1,75,000
|
|
To Debenture Redemption Reserve A/c | 1,75,000 | ||||
(Surplus amount is transferred to DRR) | |||||
April 30
|
Debenture Redemption Investment A/c | Dr. | 2,25,000 | ||
To Bank A/c | 2,25,000 | ||||
(Investment is made in specified securities equal to 15% of the value of debentures redeemed) | |||||
2015 | |||||
March 31
|
10% Debentures A/c
|
Dr.
|
|
15,00,000
|
|
|
To Debentureholders A/c
|
|
|
|
15,00,000
|
|
(10% Debentures due for redemption)
|
|
|
|
|
|
|
|
|
|
|
March 31
|
Bank A/c | Dr. | 2,25,000 | ||
To Debenture Redemption Investment A/c | 2,25,000 | ||||
(Investment made in specified securities, now encashed) | |||||
March 31
|
Debentureholders' A/c
|
Dr.
|
|
15,00,000
|
|
|
To Bank A/c
|
|
|
|
15,00,000
|
|
(Amount paid to debentureholders)
|
|
|
|
|
|
|
|
|
|
|
March 31
|
Debenture Redemption Reserve A/c
|
Dr.
|
|
3,75,000
|
|
|
To General Reserve A/c
|
|
|
|
3,75,000
|
|
(DRR amount is transferred to General Reserve)
|
|
|
|
|
|
|
|
|
|
Working Notes:
*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 a year before redemption 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) |
|
|
|
|
|
|
|
Mar. 31
|
Debenture Interest A/c
|
Dr.
|
|
1,50,000
|
|
|
To Debentureholders’ A/c
|
|
|
|
1,50,000
|
|
(Interest on 10% debentures due)
|
|
|
|
|
|
|
|
|
|
|
Mar. 31
|
Debentureholders’ A/c
|
Dr.
|
|
1,50,000
|
|
|
To Bank A/c
|
|
|
|
1,50,000
|
|
(Payment of interest to debentureholders’)
|
|
|
|
|
|
|
|
|
|
|
Mar. 31
|
Statement of Profit and Loss
|
Dr.
|
|
1,50,000
|
|
|
To Debenture Interest A/c
|
|
|
|
1,50,000
|
|
(Transfer of debenture interest to Statement of Profit and Loss)
|
|
|
|
Answer:
Books of Rich Sugar Ltd. Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2014 |
|
|
|
|
|
April 01 |
Bank A/c |
Dr. |
|
20,00,000 |
|
|
To 8% Debenture Application A/c |
|
|
20,00,000 |
|
|
(Debenture application money received) |
|
|
|
|
|
|
|
|
|
|
April 01 |
8% Debenture Application A/c |
Dr. |
|
20,00,000 |
|
|
To 8% Debentures A/c |
|
|
20,00,000 |
|
|
(Debenture application transferred to 8% Debentures account) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
April 30 | Debenture Redemption Investment A/c | Dr. | 3,00,000 | ||
To Bank A/c | 3,00,000 | ||||
(Investment is made in securities equal to 15% of the value of debentures redeemed) | |||||
2017 | |||||
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
2018 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
|
|
|
|
|
|
2019 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
|
|
|
|
|
|
2020 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
|
|
|
|
|
|
March 31 | Bank A/c | Dr. | 3,00,000 | ||
To Debenture Redemption Investment A/c | 3,00,000 | ||||
(Investment made in securities, now encashed) | |||||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,25,000 |
|
|
To General Reserve A/c |
|
|
1,25,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
*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, entry for investment in Government securities has been passed a year before first redemption year.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c | Dr. | Interest Rate Amt. of Debentures outstanding |
To Debentureholders’ A/c | ||
(Interest due) | ||
Debentureholders’ A/c | Dr. | |
To Bank A/c | ||
(Payment of interest to debentureholders’) | ||
With the total amount of interest paid in a year | ||
Statement of Profit and Loss | Dr. | |
To Debenture Interest A/c | ||
(Transfer of debenture interest to Statement of Profit and Loss) |
Page No 8.35:
Question 20:
Books of Rich Sugar Ltd. Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
2014 |
|
|
|
|
|
April 01 |
Bank A/c |
Dr. |
|
20,00,000 |
|
|
To 8% Debenture Application A/c |
|
|
20,00,000 |
|
|
(Debenture application money received) |
|
|
|
|
|
|
|
|
|
|
April 01 |
8% Debenture Application A/c |
Dr. |
|
20,00,000 |
|
|
To 8% Debentures A/c |
|
|
20,00,000 |
|
|
(Debenture application transferred to 8% Debentures account) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,50,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
2,50,000 |
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
April 30 | Debenture Redemption Investment A/c | Dr. | 3,00,000 | ||
To Bank A/c | 3,00,000 | ||||
(Investment is made in securities equal to 15% of the value of debentures redeemed) | |||||
2017 | |||||
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
2018 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
|
|
|
|
|
|
2019 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debentures due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
March 31 | Debenture Redemption Reserve A/c Dr. | 1,25,000 | |||
To General Reserve | 1,25,000 | ||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||
|
|
|
|
|
|
2020 |
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
5,00,000 |
|
|
To Debentureholders’ A/c |
|
|
5,00,000 |
|
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
5,00,000 |
|
|
To Bank A/c |
|
|
5,00,000 |
|
|
(Amount of debentures paid to debentureholders) |
|
|
|
|
|
|
|
|
|
|
March 31 | Bank A/c | Dr. | 3,00,000 | ||
To Debenture Redemption Investment A/c | 3,00,000 | ||||
(Investment made in securities, now encashed) | |||||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,25,000 |
|
|
To General Reserve A/c |
|
|
1,25,000 |
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
*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, entry for investment in Government securities has been passed a year before first redemption year.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c | Dr. | Interest Rate Amt. of Debentures outstanding |
To Debentureholders’ A/c | ||
(Interest due) | ||
Debentureholders’ A/c | Dr. | |
To Bank A/c | ||
(Payment of interest to debentureholders’) | ||
With the total amount of interest paid in a year | ||
Statement of Profit and Loss | Dr. | |
To Debenture Interest A/c | ||
(Transfer of debenture interest to Statement of Profit and Loss) |
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
2014 |
|
|
|
|
|
Mar.31 |
Surplus i.e., Balance in Statement of Profit & Loss |
Dr. |
|
3,00,000 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
3,00,000 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2014 |
|
|
|
|
|
April 1 |
Debenture Redemption Investment A/c |
Dr. |
|
60,000 |
|
|
To Bank A/c |
|
|
|
1,80,000 |
|
(Amount invested in specified security) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
April 1 | Debenture Redemption Investment A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Amount invested in specified security) |
|||||
2016 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
April 1 | Debenture Redemption Investment A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Amount invested in specified security) |
|||||
2017 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 8.35:
Question 21:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
2014 |
|
|
|
|
|
Mar.31 |
Surplus i.e., Balance in Statement of Profit & Loss |
Dr. |
|
3,00,000 |
|
|
To Debentures Redemption Reserve A/c |
|
|
|
3,00,000 |
|
(Amount transferred to Debentures Redemption Reserve) |
|
|
|
|
2014 |
|
|
|
|
|
April 1 |
Debenture Redemption Investment A/c |
Dr. |
|
60,000 |
|
|
To Bank A/c |
|
|
|
1,80,000 |
|
(Amount invested in specified security) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
April 1 | Debenture Redemption Investment A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Amount invested in specified security) |
|||||
2016 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
April 1 | Debenture Redemption Investment A/c | Dr. | 60,000 | ||
To Bank A/c | 60,000 | ||||
(Amount invested in specified security) |
|||||
2017 |
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
60,000 |
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
6% Debenture A/c |
Dr. |
|
4,00,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
To Debenture holder’s A/c |
|
|
|
4,40,000 |
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture holder’s A/c |
Dr. |
|
4,40,000 |
|
|
To Bank A/c |
|
|
|
4,40,000 |
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,00,000 |
|
|
To General Reserve A/c |
|
|
|
1,00,000 |
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
Working Note:
Answer:
Books of Tata Motors Ltd. |
||||||
Journal |
||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
2010 |
|
|
|
|
||
July 01 |
Bank A/c |
Dr. |
|
40,00,000 |
|
|
|
To Debenture Application A/c |
|
|
40,00,000 |
||
|
(Debenture application money received) |
|
|
|
||
|
|
|
|
|
||
|
Debenture Application A/c |
Dr. |
|
40,00,000 |
|
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
2,00,000 |
|
|
|
To 7% Debentures A/c |
|
|
40,00,000 |
||
|
To Premium on Redemption A/c |
|
|
2,00,00 |
||
|
(40,000 7% Debenture of Rs 100 each issued) |
|
|
|
||
|
|
|
|
|
||
2012 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
2,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
2013 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
4,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
4,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
2014 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
4,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
4,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
April 30 |
Debenture Redemption Investment A/c |
Dr. |
|
2,40,000 |
|
|
|
To Bank A/c |
|
|
2,40,000 |
||
|
(Investment is made in specified securities equal to 15% of the value of debentures redeemed on March 31, 2014) |
|
|
|
||
2015 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
16,00,000 |
|
|
|
Premium on Redemption A/c |
Dr. |
|
80,000 |
|
|
|
To Debentureholders’ A/c |
|
|
16,80,000 |
||
|
(16,000 7% Debenture of Rs 100 each due for redemption along 5% Premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debenture holders |
Dr. |
|
16,80,000 |
|
|
|
To Bank A/c |
|
|
16,80,000 |
||
|
(Amount paid to debenture holders) |
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c Dr. |
4,00,000 | ||||
To General Reserve | 4,00,000 | |||||
(Debenture Redemption Reserve transferred to General Reserve) | ||||||
April 30 | Debenture Redemption Investment A/c Dr. | 2,40,000 | ||||
To Bank A/c | 2,40,000 | |||||
(Investment is made in specified securities equal to 15% of the value of debentures redeemed on March 31, 2015) | ||||||
|
|
|
|
|
||
2016 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
16,00,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
80,000 |
|
|
|
To Debenture holders |
|
|
16,80,000 |
||
|
(16,000 7% Debentures of Rs 100 each due for redemption along with 5% premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debentureholders’ A/c |
Dr. |
|
16,80,000 |
|
|
|
To Bank A/c |
|
|
16,80,000 |
||
|
(Amount paid to debenture holders) |
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c Dr. |
4,00,000 | ||||
To General Reserve | 4,00,000 | |||||
(Debenture Redemption Reserve transferred to General Reserve) | ||||||
April 30 | 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 on March 31, 2016) | ||||||
|
|
|
|
|
||
2017 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
8,00,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
|
To Debenture holders |
|
|
8,40,000 |
||
|
(8,000 7% Debentures of Rs 100 each due for redemption along with 5% premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debentureholders’ A/c |
Dr. |
|
8,40,000 |
|
|
|
To Bank A/c |
|
|
8,40,000 |
||
|
(Payment made to debenture holders) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Bank A/c |
Dr. |
|
6,00,000 |
|
|
|
To Debenture Redemption Investment A/c |
|
|
6,00,000 |
||
|
(Investment made in securities, now encashed) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
2,00,000 |
|
|
|
To General Reserve A/c |
|
|
2,00,000 |
||
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
||
|
|
|
|
|
Working Note:
WN1 Calculation of amount of DRR
Page No 8.35:
Question 22:
Books of Tata Motors Ltd. |
||||||
Journal |
||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
2010 |
|
|
|
|
||
July 01 |
Bank A/c |
Dr. |
|
40,00,000 |
|
|
|
To Debenture Application A/c |
|
|
40,00,000 |
||
|
(Debenture application money received) |
|
|
|
||
|
|
|
|
|
||
|
Debenture Application A/c |
Dr. |
|
40,00,000 |
|
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
2,00,000 |
|
|
|
To 7% Debentures A/c |
|
|
40,00,000 |
||
|
To Premium on Redemption A/c |
|
|
2,00,00 |
||
|
(40,000 7% Debenture of Rs 100 each issued) |
|
|
|
||
|
|
|
|
|
||
2012 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
2,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
2,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
2013 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
4,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
4,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
2014 |
|
|
|
|
||
March 31 |
Statement of Profit and Loss |
Dr. |
|
4,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
4,00,000 |
||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
||
|
|
|
|
|
||
April 30 |
Debenture Redemption Investment A/c |
Dr. |
|
2,40,000 |
|
|
|
To Bank A/c |
|
|
2,40,000 |
||
|
(Investment is made in specified securities equal to 15% of the value of debentures redeemed on March 31, 2014) |
|
|
|
||
2015 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
16,00,000 |
|
|
|
Premium on Redemption A/c |
Dr. |
|
80,000 |
|
|
|
To Debentureholders’ A/c |
|
|
16,80,000 |
||
|
(16,000 7% Debenture of Rs 100 each due for redemption along 5% Premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debenture holders |
Dr. |
|
16,80,000 |
|
|
|
To Bank A/c |
|
|
16,80,000 |
||
|
(Amount paid to debenture holders) |
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c Dr. |
4,00,000 | ||||
To General Reserve | 4,00,000 | |||||
(Debenture Redemption Reserve transferred to General Reserve) | ||||||
April 30 | Debenture Redemption Investment A/c Dr. | 2,40,000 | ||||
To Bank A/c | 2,40,000 | |||||
(Investment is made in specified securities equal to 15% of the value of debentures redeemed on March 31, 2015) | ||||||
|
|
|
|
|
||
2016 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
16,00,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
80,000 |
|
|
|
To Debenture holders |
|
|
16,80,000 |
||
|
(16,000 7% Debentures of Rs 100 each due for redemption along with 5% premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debentureholders’ A/c |
Dr. |
|
16,80,000 |
|
|
|
To Bank A/c |
|
|
16,80,000 |
||
|
(Amount paid to debenture holders) |
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c Dr. |
4,00,000 | ||||
To General Reserve | 4,00,000 | |||||
(Debenture Redemption Reserve transferred to General Reserve) | ||||||
April 30 | 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 on March 31, 2016) | ||||||
|
|
|
|
|
||
2017 |
|
|
|
|
||
March 31 |
7% Debenture A/c |
Dr. |
|
8,00,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
40,000 |
|
|
|
To Debenture holders |
|
|
8,40,000 |
||
|
(8,000 7% Debentures of Rs 100 each due for redemption along with 5% premium on redemption) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debentureholders’ A/c |
Dr. |
|
8,40,000 |
|
|
|
To Bank A/c |
|
|
8,40,000 |
||
|
(Payment made to debenture holders) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Bank A/c |
Dr. |
|
6,00,000 |
|
|
|
To Debenture Redemption Investment A/c |
|
|
6,00,000 |
||
|
(Investment made in securities, now encashed) |
|
|
|
||
|
|
|
|
|
||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
2,00,000 |
|
|
|
To General Reserve A/c |
|
|
2,00,000 |
||
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
||
|
|
|
|
|
Working Note:
WN1 Calculation of amount of DRR
Answer:
Books of HP Ltd. |
|||||||
Journal |
|||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|||
2014 |
|
|
|
|
|||
March 31 |
Statement of Profit and Loss |
Dr. |
|
7,50,000 |
|
||
|
To Debenture Redemption Reserve |
|
|
7,50,000 |
|||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
|
To Bank A/c |
|
|
1,50,000 |
||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in first instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2015 |
|
|
|
|
|||
March 31 |
8% Debenture A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in second instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2016 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debenture holders) |
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in third instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2017 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 3 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
|
10,00,000 |
|
|||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fourth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2018 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fifth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2019 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(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) |
|
|
|
|||
|
|
|
|
|
*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, entry for investment in Government securities has been passed a year before first redemption year.
**Since nothing is specified, investments will be encashed before debentures are redeemed.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c | Dr. | Interest Rate Amt. of Debentures outstanding |
To Debentureholders’ A/c | ||
(Interest due) | ||
Debentureholders’ A/c | Dr. | |
To Bank A/c | ||
(Payment of interest to debentureholders’) | ||
With the total amount of interest paid in a year | ||
Statement of Profit and Loss | Dr. | |
To Debenture Interest A/c | ||
(Transfer of debenture interest to Statement of Profit and Loss) |
Page No 8.35:
Question 23:
Books of HP Ltd. |
|||||||
Journal |
|||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|||
2014 |
|
|
|
|
|||
March 31 |
Statement of Profit and Loss |
Dr. |
|
7,50,000 |
|
||
|
To Debenture Redemption Reserve |
|
|
7,50,000 |
|||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
|
To Bank A/c |
|
|
1,50,000 |
||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in first instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2015 |
|
|
|
|
|||
March 31 |
8% Debenture A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in second instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2016 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debenture holders) |
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in third instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2017 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 3 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
|
10,00,000 |
|
|||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fourth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2018 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fifth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
2019 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(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) |
|
|
|
|||
|
|
|
|
|
*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, entry for investment in Government securities has been passed a year before first redemption year.
**Since nothing is specified, investments will be encashed before debentures are redeemed.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c | Dr. | Interest Rate Amt. of Debentures outstanding |
To Debentureholders’ A/c | ||
(Interest due) | ||
Debentureholders’ A/c | Dr. | |
To Bank A/c | ||
(Payment of interest to debentureholders’) | ||
With the total amount of interest paid in a year | ||
Statement of Profit and Loss | Dr. | |
To Debenture Interest A/c | ||
(Transfer of debenture interest to Statement of Profit and Loss) |
Answer:
Books of Shakti Enterprises Ltd. |
|||||||
Journal |
|||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit |
|||
2011 |
|
|
|
|
|||
Oct 01 |
Bank A/c |
Dr. |
|
30,00,000 |
|
||
|
To 8% Debentures A/c |
|
|
|
30,00,000 |
||
|
(Debentures issued) |
|
|
|
|
||
2012 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
50,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
50,000 |
||
|
(DRR created) |
|
|
|
|
||
2013 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
4,00,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
4,00,000 |
||
|
(DRR created) |
|
|
|
|
||
2014 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
3,00,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
3,00,000 |
||
|
(DRR created) |
|
|
|
|
||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
|
To Bank A/c |
|
|
90,000 |
||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in first installment, i.e. Rs 6,00,000) |
|
|
|
|||
2015 |
|
|
|
|
|||
March 31 |
8% Debenture A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
|
(DRR on 6,000 debentures transferred to General Reserve) |
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in second instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2016 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debenture holders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
|
(DRR on 6,000 debentures transferred to General Reserve) |
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in third instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2017 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c Dr. |
|
6,00,000 |
|
|||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
(DRR on 6,000 debentures transferred to General Reserve) |
|||||||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fourth instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2018 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fifth instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2019 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,50,000 |
|
||
|
To General Reserve A/c |
|
|
1,50,000 |
|||
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|||
|
|
|
|
|
|||
Note: Transfer of DRR to General Reserve at the end of every year in answer above (Rs 1,50,000) is different from the answer given in the book (Rs 60,000).
*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, entry for investment in Government securities has been passed a year before first redemption year and will be passed before redemption of debentures every year in case of draw of lots.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c To Debentureholders’ A/c (Interest due)
Debentureholders’ A/c To Bank A/c (Payment of interest to debentureholders’) |
Dr.
Dr.
|
Interest Rate |
Statement of Profit and Loss To Debenture Interest A/c (Transfer of debenture interest to Statement of Profit and Loss) |
|
With the total amount of interest paid in a year |
Page No 8.35:
Question 24:
Books of Shakti Enterprises Ltd. |
|||||||
Journal |
|||||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit |
|||
2011 |
|
|
|
|
|||
Oct 01 |
Bank A/c |
Dr. |
|
30,00,000 |
|
||
|
To 8% Debentures A/c |
|
|
|
30,00,000 |
||
|
(Debentures issued) |
|
|
|
|
||
2012 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
50,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
50,000 |
||
|
(DRR created) |
|
|
|
|
||
2013 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
4,00,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
4,00,000 |
||
|
(DRR created) |
|
|
|
|
||
2014 |
|
|
|
|
|
||
March 31 |
Statement of Profit & Loss |
Dr. |
|
3,00,000 |
|
||
|
To Debenture Redemption Reserve A/c |
|
|
|
3,00,000 |
||
|
(DRR created) |
|
|
|
|
||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
|
To Bank A/c |
|
|
90,000 |
||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in first installment, i.e. Rs 6,00,000) |
|
|
|
|||
2015 |
|
|
|
|
|||
March 31 |
8% Debenture A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
|
(DRR on 6,000 debentures transferred to General Reserve) |
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in second instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2016 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debenture holders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
|
(DRR on 6,000 debentures transferred to General Reserve) |
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in third instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2017 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c Dr. |
|
6,00,000 |
|
|||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
(DRR on 6,000 debentures transferred to General Reserve) |
|||||||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fourth instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2018 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c Dr. |
|
1,50,000 |
|
|||
|
To General Reserve |
|
|
1,50,000 |
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
90,000 |
|
||
|
To Bank A/c |
|
|
90,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fifth instalment, i.e. Rs 6,00,000) |
|
|
|
|||
2019 |
|
|
|
|
|||
March 31 |
8% Debentures A/c |
Dr. |
|
6,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
6,00,000 |
|||
|
(6,000 8% Debenture of Rs 100 each due for redemption) |
|
|
|
|||
March 31 |
Bank A/c |
Dr. |
|
90,000 |
|
||
|
To Debenture Redemption Investment A/c |
|
|
90,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
March 31 |
Debentureholders’ A/c |
Dr. |
|
6,00,000 |
|
||
|
To Bank A/c |
|
|
6,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
1,50,000 |
|
||
|
To General Reserve A/c |
|
|
1,50,000 |
|||
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|||
|
|
|
|
|
|||
Note: Transfer of DRR to General Reserve at the end of every year in answer above (Rs 1,50,000) is different from the answer given in the book (Rs 60,000).
*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, entry for investment in Government securities has been passed a year before first redemption year and will be passed before redemption of debentures every year in case of draw of lots.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c To Debentureholders’ A/c (Interest due)
Debentureholders’ A/c To Bank A/c (Payment of interest to debentureholders’) |
Dr.
Dr.
|
Interest Rate |
Statement of Profit and Loss To Debenture Interest A/c (Transfer of debenture interest to Statement of Profit and Loss) |
|
With the total amount of interest paid in a year |
Answer:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (1,000×92) |
Dr. |
|
92,000 |
|
|
|
To Bank A/c |
|
|
|
92,000 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures A/c |
Dr. |
|
1,00,000 |
|
|
|
To Own Debentures A/c |
|
|
|
92,000 |
|
|
To Profit on Cancellation of Own Debentures A/c |
|
|
|
8,000 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on Cancellation of Own Debentures A/c |
Dr. |
|
8,000 |
|
|
|
To Capital Reserve A/c |
|
|
|
8,000 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Page No 8.35:
Question 25:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (1,000×92) |
Dr. |
|
92,000 |
|
|
|
To Bank A/c |
|
|
|
92,000 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures A/c |
Dr. |
|
1,00,000 |
|
|
|
To Own Debentures A/c |
|
|
|
92,000 |
|
|
To Profit on Cancellation of Own Debentures A/c |
|
|
|
8,000 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on Cancellation of Own Debentures A/c |
Dr. |
|
8,000 |
|
|
|
To Capital Reserve A/c |
|
|
|
8,000 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Answer:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
2010 |
|
|
|
|
|
|
July 01 |
Own Debentures A/c (300×93) |
Dr. |
|
27,900 |
|
|
|
To Bank A/c |
|
|
|
27,900 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
12% Debentures A/c |
Dr. |
|
30,000 |
|
|
|
To Own Debentures A/c |
|
|
|
27,900 |
|
|
To Profit on Cancellation of Own Debentures A/c |
|
|
|
2,100 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on Cancellation of Own Debentures A/c |
Dr. |
|
2,100 |
|
|
|
To Capital Reserve A/c |
|
|
|
2,100 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Page No 8.35:
Question 26:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
2010 |
|
|
|
|
|
|
July 01 |
Own Debentures A/c (300×93) |
Dr. |
|
27,900 |
|
|
|
To Bank A/c |
|
|
|
27,900 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
12% Debentures A/c |
Dr. |
|
30,000 |
|
|
|
To Own Debentures A/c |
|
|
|
27,900 |
|
|
To Profit on Cancellation of Own Debentures A/c |
|
|
|
2,100 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on Cancellation of Own Debentures A/c |
Dr. |
|
2,100 |
|
|
|
To Capital Reserve A/c |
|
|
|
2,100 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Answer:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (250×98) |
Dr. |
|
24,500 |
|
|
|
To Bank A/c |
|
|
|
24,500 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Own Debentures A/c |
Dr. |
|
50 |
|
|
|
To Bank A/c |
|
|
|
50 |
|
|
(Expenses for purchase of own debentures paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
15% Debentures A/c |
Dr. |
|
25,000 |
|
|
|
To Own Debentures A/c (24500+50) |
|
|
|
24,550 |
|
|
To Profit on cancellation of own debentures A/c |
|
|
|
450 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on cancellation of own debentures A/c |
Dr. |
|
450 |
|
|
|
To Capital Reserve A/c |
|
|
|
450 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Page No 8.35:
Question 27:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (250×98) |
Dr. |
|
24,500 |
|
|
|
To Bank A/c |
|
|
|
24,500 |
|
|
(Own debentures purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Own Debentures A/c |
Dr. |
|
50 |
|
|
|
To Bank A/c |
|
|
|
50 |
|
|
(Expenses for purchase of own debentures paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
15% Debentures A/c |
Dr. |
|
25,000 |
|
|
|
To Own Debentures A/c (24500+50) |
|
|
|
24,550 |
|
|
To Profit on cancellation of own debentures A/c |
|
|
|
450 |
|
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on cancellation of own debentures A/c |
Dr. |
|
450 |
|
|
|
To Capital Reserve A/c |
|
|
|
450 |
|
|
(Profit on cancellation transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
|
Note: It is assumed that the company has sufficient balance in DRR and investment is also made.
Answer:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (1,00,000×10) |
Dr. |
|
10,00,000 |
|
|
|
To Bank A/c |
|
|
|
10,00,000 |
|
|
(Own debentures purchased) |
|
|
|
|
|
9% Debentures A/c | Dr. | 10,00,000 | ||||
To Own Debentures A/c | 10,00,000 | |||||
(Cancellation of own debentures) | ||||||
|
|
|
|
|
|
Note:
- It is assumed that the company has sufficient balance in DRR and investment is also made.
- Also, there is neither gain nor loss on cancellation of own debentures.
Page No 8.35:
Question 28:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Own Debentures A/c (1,00,000×10) |
Dr. |
|
10,00,000 |
|
|
|
To Bank A/c |
|
|
|
10,00,000 |
|
|
(Own debentures purchased) |
|
|
|
|
|
9% Debentures A/c | Dr. | 10,00,000 | ||||
To Own Debentures A/c | 10,00,000 | |||||
(Cancellation of own debentures) | ||||||
|
|
|
|
|
|
Note:
- It is assumed that the company has sufficient balance in DRR and investment is also made.
- Also, there is neither gain nor loss on cancellation of own debentures.
Answer:
Journal | ||||||
Date | Particulars | L.F. | Debit Amount Rs |
Credit Amount Rs |
||
2013 | ||||||
April 01 | Bank A/c (40,000×100) | Dr. | 40,00,000 | |||
To Debenture Application & Allotment A/c | 40,00,000 | |||||
(Amount received on issue of 40,000 debentures) | ||||||
April 01 | Debenture Application & Allotment A/c | Dr. | 40,00,000 | |||
To 9% Debentures A/c | 40,00,000 | |||||
(Allotment of 40,000 debentures made) | ||||||
April 01 | Securities Premium Reserve A/c | Dr. | 12,000 | |||
To Expenses on Issue of Debentures A/c | 12,000 | |||||
(Expenses on issue of debentures written off) | ||||||
2014 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | |||||
(Interest paid on debentures) | ||||||
March 31* | Statement of Profit and Loss (25% of Rs 40,00,000) | Dr. | 10,00,000 | |||
To Debenture Redemption Reserve A/c | 10,00,000 | |||||
(Amount transferred to debenture redemption reserve) | ||||||
April 30* | Debenture Redemption Investment A/c | Dr. | 30,000 | |||
To Bank A/c | 30,000 | |||||
(Investment is made in specified securities equal to 15% of the nominal value of debentures due for redemption, i.e. Rs 2,00,000) | ||||||
2015 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | |||||
(Interest paid on debentures) | ||||||
March 31 | 9% Debentures A/c | Dr. | 2,00,000 | |||
To Debentureholders’ A/c | 2,00,000 | |||||
(Debentures due for payment) | ||||||
March 31 | Bank A/c** | Dr. | 30,000 | |||
To Debenture Redemption Investment A/c | 30,000 | |||||
(Investments were encashed) | ||||||
March 31 | Debentureholders’ A/c | 2,00,000 | ||||
To Bank A/c | 2,00,000 | |||||
(Payment made to debentureholders) | ||||||
March 31 | Debenture Redemption Reserve A/c | Dr. | 50,000 | |||
To General Reserve | 50,000 | |||||
(DRR on 2,000 debentures transferred to General Reserve) | ||||||
April 30* | Debenture Redemption Investment A/c | Dr. | 30,000 | |||
To Bank A/c | 30,000 | |||||
(Investment is made in specified securities equal to 15% of the nominal value of debentures due for redemption, i.e. Rs 2,00,000) | ||||||
2016 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,42,000 | |||
To Bank A/c | 3,42,000 | |||||
(Interest paid on debentures) | ||||||
March 31 | Own Debentures A/c (2,000×98) | Dr. | 1,96,000 | |||
To Bank A/c | 1,96,000 | |||||
(Own debentures purchased) | ||||||
March 31 | Own Debentures A/c | Dr. | 400 | |||
To Bank A/c | 400 | |||||
(Expenses on issue of own debentures) | ||||||
March 31 | Debenture Redemption Reserve A/c | Dr. | 50,000 | |||
To General Reserve | 50,000 | |||||
(DRR on 2,000 debentures transferred to General Reserve) | ||||||
March 31 | Bank A/c** | Dr. | 30,000 | |||
To Debenture Redemption Investment A/c | 30,000 | |||||
(Investments were encashed) | ||||||
March 31 | 9%Debentures A/c | Dr. | 2,00,000 | |||
To Own Debentures A/c | 1,96,400 | |||||
To Profit on Cancellation of own debentures A/c | 3,600 | |||||
(Own debentures cancelled) | ||||||
March 31 | Profit on Cancellation of own debentures A/c | Dr. | 3,600 | |||
To Capital Reserve A/c | 3,600 | |||||
(Profit on cancellation transferred to capital reserve) | ||||||
1. * 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.
2. DRR is created for the full amount of debentures, i.e. Rs 40,00,000, whereas, Debenture Redemption Investment is created for the nominal value of debentures redeeming on March 31, 2015.
3. ** We have assumed that investments were encashed every year before redemption of debentures. However, there can be another possibility where investments were not encashed after every redemption and it remain invested in the specified securities since debentures of Rs 2,00,000 are to be redeemed every year. Thus, any one method can be followed by giving an appropriate note.
4. Redemption entries were made for 2015 and 2016 only since nothing is specified in the question regarding the redemption of the remaining debentures.
5. # In order to align with the solution of the book we have provided only payment entry for interest on debentures. However, it is purely at student's discretion to pass the below-given entries for interest on debentures and these entries will be repeated every time with interest.
Debenture Interest A/c | Dr. | 3,60,000 | |||
To Debentureholders’ A/c | 3,60,000 | ||||
(Interest due on 9% debentures) | |||||
Debentureholders’ A/c | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | ||||
(Payment of interest to debentureholders’) | |||||
Statement of Profit and Loss | Dr. | 3,60,000 | |||
To Debenture Interest A/c | 3,60,000 | ||||
(Transfer of debenture interest to Statement of Profit and Loss) |
- When debentures are redeemed only by open market purchase: In this case we will create DRR and Debenture Redemption Investment only if it is specified in the question.
- When debentures are redeemed using combination of any two methods (say, draw of lots and open-market or lump-sum and open market): In such a case, Debenture Redemption Investment will be made, even if nothing is stated in the question. Investments will be created for the 15% of value of debentures getting redeemed on March 31 of the year. Assuming adequate investment has been made in DRI will not be accepted, since this is not a pure case of open-market purchase.
Page No 8.36:
Question 29:
Journal | ||||||
Date | Particulars | L.F. | Debit Amount Rs |
Credit Amount Rs |
||
2013 | ||||||
April 01 | Bank A/c (40,000×100) | Dr. | 40,00,000 | |||
To Debenture Application & Allotment A/c | 40,00,000 | |||||
(Amount received on issue of 40,000 debentures) | ||||||
April 01 | Debenture Application & Allotment A/c | Dr. | 40,00,000 | |||
To 9% Debentures A/c | 40,00,000 | |||||
(Allotment of 40,000 debentures made) | ||||||
April 01 | Securities Premium Reserve A/c | Dr. | 12,000 | |||
To Expenses on Issue of Debentures A/c | 12,000 | |||||
(Expenses on issue of debentures written off) | ||||||
2014 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | |||||
(Interest paid on debentures) | ||||||
March 31* | Statement of Profit and Loss (25% of Rs 40,00,000) | Dr. | 10,00,000 | |||
To Debenture Redemption Reserve A/c | 10,00,000 | |||||
(Amount transferred to debenture redemption reserve) | ||||||
April 30* | Debenture Redemption Investment A/c | Dr. | 30,000 | |||
To Bank A/c | 30,000 | |||||
(Investment is made in specified securities equal to 15% of the nominal value of debentures due for redemption, i.e. Rs 2,00,000) | ||||||
2015 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | |||||
(Interest paid on debentures) | ||||||
March 31 | 9% Debentures A/c | Dr. | 2,00,000 | |||
To Debentureholders’ A/c | 2,00,000 | |||||
(Debentures due for payment) | ||||||
March 31 | Bank A/c** | Dr. | 30,000 | |||
To Debenture Redemption Investment A/c | 30,000 | |||||
(Investments were encashed) | ||||||
March 31 | Debentureholders’ A/c | 2,00,000 | ||||
To Bank A/c | 2,00,000 | |||||
(Payment made to debentureholders) | ||||||
March 31 | Debenture Redemption Reserve A/c | Dr. | 50,000 | |||
To General Reserve | 50,000 | |||||
(DRR on 2,000 debentures transferred to General Reserve) | ||||||
April 30* | Debenture Redemption Investment A/c | Dr. | 30,000 | |||
To Bank A/c | 30,000 | |||||
(Investment is made in specified securities equal to 15% of the nominal value of debentures due for redemption, i.e. Rs 2,00,000) | ||||||
2016 | ||||||
March 31 | Debenture’s Interest A/c# | Dr. | 3,42,000 | |||
To Bank A/c | 3,42,000 | |||||
(Interest paid on debentures) | ||||||
March 31 | Own Debentures A/c (2,000×98) | Dr. | 1,96,000 | |||
To Bank A/c | 1,96,000 | |||||
(Own debentures purchased) | ||||||
March 31 | Own Debentures A/c | Dr. | 400 | |||
To Bank A/c | 400 | |||||
(Expenses on issue of own debentures) | ||||||
March 31 | Debenture Redemption Reserve A/c | Dr. | 50,000 | |||
To General Reserve | 50,000 | |||||
(DRR on 2,000 debentures transferred to General Reserve) | ||||||
March 31 | Bank A/c** | Dr. | 30,000 | |||
To Debenture Redemption Investment A/c | 30,000 | |||||
(Investments were encashed) | ||||||
March 31 | 9%Debentures A/c | Dr. | 2,00,000 | |||
To Own Debentures A/c | 1,96,400 | |||||
To Profit on Cancellation of own debentures A/c | 3,600 | |||||
(Own debentures cancelled) | ||||||
March 31 | Profit on Cancellation of own debentures A/c | Dr. | 3,600 | |||
To Capital Reserve A/c | 3,600 | |||||
(Profit on cancellation transferred to capital reserve) | ||||||
1. * 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.
2. DRR is created for the full amount of debentures, i.e. Rs 40,00,000, whereas, Debenture Redemption Investment is created for the nominal value of debentures redeeming on March 31, 2015.
3. ** We have assumed that investments were encashed every year before redemption of debentures. However, there can be another possibility where investments were not encashed after every redemption and it remain invested in the specified securities since debentures of Rs 2,00,000 are to be redeemed every year. Thus, any one method can be followed by giving an appropriate note.
4. Redemption entries were made for 2015 and 2016 only since nothing is specified in the question regarding the redemption of the remaining debentures.
5. # In order to align with the solution of the book we have provided only payment entry for interest on debentures. However, it is purely at student's discretion to pass the below-given entries for interest on debentures and these entries will be repeated every time with interest.
Debenture Interest A/c | Dr. | 3,60,000 | |||
To Debentureholders’ A/c | 3,60,000 | ||||
(Interest due on 9% debentures) | |||||
Debentureholders’ A/c | Dr. | 3,60,000 | |||
To Bank A/c | 3,60,000 | ||||
(Payment of interest to debentureholders’) | |||||
Statement of Profit and Loss | Dr. | 3,60,000 | |||
To Debenture Interest A/c | 3,60,000 | ||||
(Transfer of debenture interest to Statement of Profit and Loss) |
- When debentures are redeemed only by open market purchase: In this case we will create DRR and Debenture Redemption Investment only if it is specified in the question.
- When debentures are redeemed using combination of any two methods (say, draw of lots and open-market or lump-sum and open market): In such a case, Debenture Redemption Investment will be made, even if nothing is stated in the question. Investments will be created for the 15% of value of debentures getting redeemed on March 31 of the year. Assuming adequate investment has been made in DRI will not be accepted, since this is not a pure case of open-market purchase.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (1,000100) |
Dr. |
|
1,00,000 |
|
|
To Bank A/c |
|
|
|
1,00,000 |
|
(1,000, 10% debentures purchased @ 100 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
10% Debentures A/c |
Dr. |
|
1,00,000 |
|
|
Premium on Redemption of Debentures A/c (1,0005) |
Dr. |
|
5,000 |
|
|
To Own Debentures A/c |
|
|
|
1,00,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
5,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
5,000 |
|
|
To Capital Reserve A/c |
|
|
|
5,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Page No 8.36:
Question 30:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (1,000100) |
Dr. |
|
1,00,000 |
|
|
To Bank A/c |
|
|
|
1,00,000 |
|
(1,000, 10% debentures purchased @ 100 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
10% Debentures A/c |
Dr. |
|
1,00,000 |
|
|
Premium on Redemption of Debentures A/c (1,0005) |
Dr. |
|
5,000 |
|
|
To Own Debentures A/c |
|
|
|
1,00,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
5,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
5,000 |
|
|
To Capital Reserve A/c |
|
|
|
5,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (1,50095) |
Dr. |
|
1,42,500 |
|
|
To Bank A/c |
|
|
|
1,42,500 |
|
(1,500, 11% debentures purchased @ 95 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
11% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,42,500 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
22,500 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
22,500 |
|
|
To Capital Reserve A/c |
|
|
|
22,500 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Page No 8.36:
Question 31:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (1,50095) |
Dr. |
|
1,42,500 |
|
|
To Bank A/c |
|
|
|
1,42,500 |
|
(1,500, 11% debentures purchased @ 95 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
11% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,42,500 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
22,500 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
22,500 |
|
|
To Capital Reserve A/c |
|
|
|
22,500 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (2,000103) |
Dr. |
|
2,06,000 |
|
|
To Bank A/c |
|
|
|
2,06,000 |
|
(2,000, 11% debentures purchased @103 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
11% Debentures A/c (2,000100) |
Dr. |
|
2,00,000 |
|
|
Premium on Redemption of Debentures A/c (2,00010) |
Dr. |
|
20,000 |
|
|
To Own Debentures A/c |
|
|
|
2,06,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
14,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
14,000 |
|
|
To Capital Reserve A/c |
|
|
|
14,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Page No 8.36:
Question 32:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (2,000103) |
Dr. |
|
2,06,000 |
|
|
To Bank A/c |
|
|
|
2,06,000 |
|
(2,000, 11% debentures purchased @103 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
11% Debentures A/c (2,000100) |
Dr. |
|
2,00,000 |
|
|
Premium on Redemption of Debentures A/c (2,00010) |
Dr. |
|
20,000 |
|
|
To Own Debentures A/c |
|
|
|
2,06,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
14,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
|
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
14,000 |
|
|
To Capital Reserve A/c |
|
|
|
14,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (2,500112) |
Dr. |
|
2,80,000 |
|
|
To Bank A/c |
|
|
|
2,80,000 |
|
(2,500, 10% debentures purchased @112 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
10% Debentures A/c (2,500100) |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c (2,50010) |
Dr. |
|
25,000 |
|
|
Loss on Cancellation of Debentures A/c |
Dr. |
|
5,000 |
|
|
To Own Debentures A/c |
|
|
|
2,80,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
Page No 8.36:
Question 33:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Own Debentures A/c (2,500112) |
Dr. |
|
2,80,000 |
|
|
To Bank A/c |
|
|
|
2,80,000 |
|
(2,500, 10% debentures purchased @112 per debenture) |
|
|
|
|
|
|
|
|
|
|
|
10% Debentures A/c (2,500100) |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c (2,50010) |
Dr. |
|
25,000 |
|
|
Loss on Cancellation of Debentures A/c |
Dr. |
|
5,000 |
|
|
To Own Debentures A/c |
|
|
|
2,80,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
2013 |
|
|
|
|
|
Apr.01 |
Bank A/c (4,500105) |
Dr. |
|
4,72,500 |
|
|
To Debentures Application A/c |
|
|
|
4,72,500 |
|
(Received application money on 4,500 debentures) |
|
|
|
|
|
|
|
|
|
|
Apr.01 |
Debentures Application A/c |
Dr. |
|
4,72,500 |
|
|
Loss on Issue of Debentures A/c (4,50010) |
Dr. |
|
45,000 |
|
|
To 10% Debentures A/c (4,500100) |
|
|
|
4,50,000 |
|
To Security Premium Reserve A/c (4,5005) |
|
|
|
22,500 |
|
To Premium on Redemption of Debentures A/c (4,50010) |
|
|
|
45,000 |
|
(Transfer of application money to Share Capital) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Surplus, i.e., Balance in Statement of Profit & Loss A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture Redemption Reserve A/c |
|
|
|
1,12,500 |
|
(DRR created of amount equal to 25% of the value of debentures) |
|
|
|
|
|
|
|
|
|
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2016 invested) |
|
|
|
|
2016 |
|
|
|
|
|
Jan.01 |
Own Debentures A/c (1,50098) |
Dr. |
|
1,47,000 |
|
|
To Bank A/c |
|
|
|
1,47,000 |
|
(1,500, 10% debentures purchased @ 98 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,47,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
18,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
18,000 |
|
|
To Capital Reserve A/c |
|
|
|
18,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
|
Mar.31 | Debenture Redemption Reserve A/c | Dr. | 37,500 | ||
To General Reserve A/c | 37,500 | ||||
(DRR on 1,500 debentures transferred to General Reserve) | |||||
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2017 invested) |
|
|
|
|
2017 |
|
|
|
|
|
Mar.01 |
Own Debentures A/c (1,500106) |
Dr. |
|
1,59,000 |
|
|
To Bank A/c |
|
|
|
1,59,000 |
|
(1,500, 10% debentures purchased @ 106 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,59,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
6,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
6,000 |
|
|
To Capital Reserve A/c |
|
|
|
6,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
Mar.31 | Debenture Redemption Reserve A/c | Dr. | 37,500 | ||
To General Reserve | 37,500 | ||||
(DRR on 1,500 debentures transferred to General Reserve) | |||||
|
|
|
|
|
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2016 invested) |
|
|
|
|
2018 |
|
|
|
|
|
Mar.15 |
Own Debentures A/c (1,500115) |
Dr. |
|
1,72,500 |
|
|
To Bank A/c |
|
|
|
1,72,500 |
|
(1,500, 10% debentures purchased @ 115 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debenture A/c (1,50010) |
Dr. |
|
15,000 |
|
|
Loss on Cancellation of Own Debentures A/c |
Dr. |
|
7,500 |
|
|
To Own Debentures A/c |
|
|
|
1,72,500 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
67,500 |
|
|
To Debentures Redemption Investment A/c |
|
|
|
67,500 |
|
(Investment encashed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
37,500 |
|
|
To General Reserve A/c |
|
|
|
37,500 |
|
(DRR transferred to general reserve) |
|
|
|
|
|
|
|
|
|
Page No 8.36:
Question 34:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
2013 |
|
|
|
|
|
Apr.01 |
Bank A/c (4,500105) |
Dr. |
|
4,72,500 |
|
|
To Debentures Application A/c |
|
|
|
4,72,500 |
|
(Received application money on 4,500 debentures) |
|
|
|
|
|
|
|
|
|
|
Apr.01 |
Debentures Application A/c |
Dr. |
|
4,72,500 |
|
|
Loss on Issue of Debentures A/c (4,50010) |
Dr. |
|
45,000 |
|
|
To 10% Debentures A/c (4,500100) |
|
|
|
4,50,000 |
|
To Security Premium Reserve A/c (4,5005) |
|
|
|
22,500 |
|
To Premium on Redemption of Debentures A/c (4,50010) |
|
|
|
45,000 |
|
(Transfer of application money to Share Capital) |
|
|
|
|
2015 |
|
|
|
|
|
Mar.31 |
Surplus, i.e., Balance in Statement of Profit & Loss A/c |
Dr. |
|
1,12,500 |
|
|
To Debenture Redemption Reserve A/c |
|
|
|
1,12,500 |
|
(DRR created of amount equal to 25% of the value of debentures) |
|
|
|
|
|
|
|
|
|
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2016 invested) |
|
|
|
|
2016 |
|
|
|
|
|
Jan.01 |
Own Debentures A/c (1,50098) |
Dr. |
|
1,47,000 |
|
|
To Bank A/c |
|
|
|
1,47,000 |
|
(1,500, 10% debentures purchased @ 98 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,47,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
18,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
18,000 |
|
|
To Capital Reserve A/c |
|
|
|
18,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
|
|
|
|
|
|
Mar.31 | Debenture Redemption Reserve A/c | Dr. | 37,500 | ||
To General Reserve A/c | 37,500 | ||||
(DRR on 1,500 debentures transferred to General Reserve) | |||||
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2017 invested) |
|
|
|
|
2017 |
|
|
|
|
|
Mar.01 |
Own Debentures A/c (1,500106) |
Dr. |
|
1,59,000 |
|
|
To Bank A/c |
|
|
|
1,59,000 |
|
(1,500, 10% debentures purchased @ 106 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debentures A/c (1,50010) |
Dr. |
|
15,000 |
|
|
To Own Debentures A/c |
|
|
|
1,59,000 |
|
To Gain on Cancellation of Own Debentures A/c |
|
|
|
6,000 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Gain on Cancellation of Own Debentures A/c |
Dr. |
|
6,000 |
|
|
To Capital Reserve A/c |
|
|
|
6,000 |
|
(Gain on cancellation of own debentures transferred to capital reserve ) |
|
|
|
|
Mar.31 | Debenture Redemption Reserve A/c | Dr. | 37,500 | ||
To General Reserve | 37,500 | ||||
(DRR on 1,500 debentures transferred to General Reserve) | |||||
|
|
|
|
|
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(15% of the amount of debentures to be redeemed on March 31, 2016 invested) |
|
|
|
|
2018 |
|
|
|
|
|
Mar.15 |
Own Debentures A/c (1,500115) |
Dr. |
|
1,72,500 |
|
|
To Bank A/c |
|
|
|
1,72,500 |
|
(1,500, 10% debentures purchased @ 115 per debenture) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
10% Debentures A/c (1,500100) |
Dr. |
|
1,50,000 |
|
|
Premium on Redemption of Debenture A/c (1,50010) |
Dr. |
|
15,000 |
|
|
Loss on Cancellation of Own Debentures A/c |
Dr. |
|
7,500 |
|
|
To Own Debentures A/c |
|
|
|
1,72,500 |
|
(Own debentures cancelled) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Bank A/c |
Dr. |
|
67,500 |
|
|
To Debentures Redemption Investment A/c |
|
|
|
67,500 |
|
(Investment encashed) |
|
|
|
|
|
|
|
|
|
|
Mar.31 |
Debenture Redemption Reserve A/c |
Dr. |
|
37,500 |
|
|
To General Reserve A/c |
|
|
|
37,500 |
|
(DRR transferred to general reserve) |
|
|
|
|
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit |
Credit Amount |
|
2005-06 |
Bank A/c (5,000×100) |
Dr. |
5,00,000 |
||
To Debenture Application A/c |
5,00,000 |
||||
(Amount received on issue of 5,000 debentures) |
|||||
|
|||||
Debenture Application A/c |
Dr. |
5,00,000 |
|||
To 10% Debentures A/c |
5,00,000 |
||||
(Allotment of 5,000 debentures done) |
|||||
|
|||||
2005 |
|||||
Sept. 30 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debentureholders’ A/c |
25,000 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debentureholders’ A/c |
Dr. |
25,000 |
|||
To Bank A/c |
25,000 |
||||
(Payment made to debentureholders) |
|||||
|
|||||
2006 |
|||||
Mar. 31 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debentureholders’ A/c |
25,000 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debentureholders’ A/c |
Dr. |
25,000 |
|||
To Bank A/c |
25,000 |
||||
(Payment made to debentureholders) |
|||||
|
|||||
Statement of Profit and Loss |
Dr. |
50,000 |
|||
To Debenture’s Interest A/c |
50,000 |
||||
|
|||||
From |
Pass the above Journal entries every year on September 30 and March 31 of the following years- 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013) |
||||
|
|||||
2013 |
|||||
Apr. 01 |
Investment in Own Debentures A/c |
Dr. |
48,000 |
||
To Bank A/c |
48,000 |
||||
(Own debentures purchased) |
|||||
|
|||||
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
7,500 |
||
To Bank A/c |
7,500 |
||||
(Investments made @ 15% of the face value of debentures redeeming on March 31, 2014) |
|||||
|
|||||
Sept 30 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debenture holder’s A/c |
22,500 |
||||
To Interest on Own Debentures A/c |
2,500 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debenture holder’s A/c |
Dr. |
22,500 |
|||
To Bank A/c |
22,500 |
||||
(Payment of Interest on debentures to outsiders) |
|||||
|
|||||
2014 |
|||||
Mar. 31 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debenture holder’s A/c |
22,500 |
||||
To Interest on Own Debentures A/c |
2,500 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debenture holder’s A/c |
Dr. |
22,500 |
|||
To Bank A/c |
22,500 |
||||
(Payment of Interest on debentures to outsiders) |
|||||
|
|||||
Interest on Own Debentures A/c |
Dr. |
5,000 |
|||
To Statement of Profit and Loss |
5,000 |
||||
(Interest on own debentures credited to statement of profit and loss) |
|||||
|
|||||
Statement of Profit and Loss |
Dr. |
50,000 |
|||
To Debenture’s Interest A/c |
50,000 |
||||
(Debenture interest transferred to statement of profit and loss) |
|||||
|
|||||
Bank A/c |
Dr. |
7,500 |
|||
To Debenture Redemption Investment A/c |
7,500 |
||||
(Investments were encashed) |
|||||
|
|||||
10% Debentures A/c |
Dr. |
50,000 |
|||
To Investment in Own Debentures A/c |
48,000 |
||||
To Profit on Cancellation of own debentures A/c |
2,000 |
||||
(Own debentures cancelled) |
|||||
|
|||||
Profit on Cancellation of own debentures A/c |
Dr. |
2,000 |
|||
To Capital Reserve A/c |
2,000 |
||||
(Profit on cancellation transferred to capital reserve) |
|||||
|
Page No 8.36:
Question 35:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit |
Credit Amount |
|
2005-06 |
Bank A/c (5,000×100) |
Dr. |
5,00,000 |
||
To Debenture Application A/c |
5,00,000 |
||||
(Amount received on issue of 5,000 debentures) |
|||||
|
|||||
Debenture Application A/c |
Dr. |
5,00,000 |
|||
To 10% Debentures A/c |
5,00,000 |
||||
(Allotment of 5,000 debentures done) |
|||||
|
|||||
2005 |
|||||
Sept. 30 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debentureholders’ A/c |
25,000 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debentureholders’ A/c |
Dr. |
25,000 |
|||
To Bank A/c |
25,000 |
||||
(Payment made to debentureholders) |
|||||
|
|||||
2006 |
|||||
Mar. 31 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debentureholders’ A/c |
25,000 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debentureholders’ A/c |
Dr. |
25,000 |
|||
To Bank A/c |
25,000 |
||||
(Payment made to debentureholders) |
|||||
|
|||||
Statement of Profit and Loss |
Dr. |
50,000 |
|||
To Debenture’s Interest A/c |
50,000 |
||||
|
|||||
From |
Pass the above Journal entries every year on September 30 and March 31 of the following years- 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013) |
||||
|
|||||
2013 |
|||||
Apr. 01 |
Investment in Own Debentures A/c |
Dr. |
48,000 |
||
To Bank A/c |
48,000 |
||||
(Own debentures purchased) |
|||||
|
|||||
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
7,500 |
||
To Bank A/c |
7,500 |
||||
(Investments made @ 15% of the face value of debentures redeeming on March 31, 2014) |
|||||
|
|||||
Sept 30 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debenture holder’s A/c |
22,500 |
||||
To Interest on Own Debentures A/c |
2,500 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debenture holder’s A/c |
Dr. |
22,500 |
|||
To Bank A/c |
22,500 |
||||
(Payment of Interest on debentures to outsiders) |
|||||
|
|||||
2014 |
|||||
Mar. 31 |
Debenture’s Interest A/c |
Dr. |
25,000 |
||
To Debenture holder’s A/c |
22,500 |
||||
To Interest on Own Debentures A/c |
2,500 |
||||
(Interest due on debentures) |
|||||
|
|||||
Debenture holder’s A/c |
Dr. |
22,500 |
|||
To Bank A/c |
22,500 |
||||
(Payment of Interest on debentures to outsiders) |
|||||
|
|||||
Interest on Own Debentures A/c |
Dr. |
5,000 |
|||
To Statement of Profit and Loss |
5,000 |
||||
(Interest on own debentures credited to statement of profit and loss) |
|||||
|
|||||
Statement of Profit and Loss |
Dr. |
50,000 |
|||
To Debenture’s Interest A/c |
50,000 |
||||
(Debenture interest transferred to statement of profit and loss) |
|||||
|
|||||
Bank A/c |
Dr. |
7,500 |
|||
To Debenture Redemption Investment A/c |
7,500 |
||||
(Investments were encashed) |
|||||
|
|||||
10% Debentures A/c |
Dr. |
50,000 |
|||
To Investment in Own Debentures A/c |
48,000 |
||||
To Profit on Cancellation of own debentures A/c |
2,000 |
||||
(Own debentures cancelled) |
|||||
|
|||||
Profit on Cancellation of own debentures A/c |
Dr. |
2,000 |
|||
To Capital Reserve A/c |
2,000 |
||||
(Profit on cancellation transferred to capital reserve) |
|||||
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
2016 |
|
|
|
|
|
July 01 |
Own Debentures A/c |
Dr. |
37,200 |
||
|
To Bank A/c (40093) |
|
|
|
37,200 |
|
(Own Debenture purchased) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (40099) |
Dr. |
|
39,600 |
|
|
To Own Debentures A/c |
|
|
|
37,200 |
|
To Gain on sale of Own Debentures A/c |
|
|
|
2,400 |
(Own Debenture sold at a profit) | |||||
Gain on sale of Own Debentures A/c | Dr. | 2,400 | |||
To Capital Reserve | 2,400 | ||||
(Gain transferred to Capital Reserve) | |||||
|
|
|
|
|
Page No 8.36:
Question 36:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
2016 |
|
|
|
|
|
July 01 |
Own Debentures A/c |
Dr. |
37,200 |
||
|
To Bank A/c (40093) |
|
|
|
37,200 |
|
(Own Debenture purchased) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (40099) |
Dr. |
|
39,600 |
|
|
To Own Debentures A/c |
|
|
|
37,200 |
|
To Gain on sale of Own Debentures A/c |
|
|
|
2,400 |
(Own Debenture sold at a profit) | |||||
Gain on sale of Own Debentures A/c | Dr. | 2,400 | |||
To Capital Reserve | 2,400 | ||||
(Gain transferred to Capital Reserve) | |||||
|
|
|
|
|
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
2011 |
|
|
|
|
|
July 31 |
Bank A/c |
Dr. |
|
11,00,000 |
|
|
To Debenture Application & Allotment A/c |
|
|
|
11,00,000 |
|
(Amount received on Application) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Application & Allotment A/c |
Dr. |
|
11,00,000 |
|
|
Loss on Issue of Debenture A/c |
Dr. |
|
2,00,000 |
|
|
To 8% Debentures |
|
|
|
10,00,000 |
|
To Securities Premium Reserve |
|
|
|
1,00,000 |
|
To Premium on Redemption of Debentures A/c |
|
|
|
2,00,000 |
|
(20,000 8% Debentures issued at 10% premium and redeemable at 20% premium) |
|
|
|
|
2012 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. | 53,333 | ||
To Debentureholders’ A/c |
48,000 | ||||
To TDS Payable A/c |
5,333 | ||||
(Interest on debentures payable, TDS deducted@10%) |
|||||
March 31 |
Surplus, i.e., Statement of Profit and Loss |
Dr |
|
1,25,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
|
1,25,000 |
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
2013 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. | 80,000 | ||
To Debentureholders’ A/c |
72,000 | ||||
To TDS Payable A/c |
8,000 | ||||
(Interest on debentures payable, TDS deducted@10%) |
|||||
March 31 |
Surplus, i.e., Statement of Profit and Loss |
Dr |
|
1,25,000 |
|
|
To Debenture Redemption Reserve A/c |
|
|
|
1,25,000 |
|
(Profit transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Debenture Redemption Investment A/c |
Dr. |
|
1,50,000 |
|
|
To Bank A/c |
|
|
|
1,50,000 |
|
(Investment made as fixed deposit, earning interest @6%) |
|
|
|
|
2014 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. |
|
80,000 |
|
|
To Debentureholders’ A/c |
|
|
|
72,000 |
|
To TDS Payable A/c |
|
|
|
8,000 |
|
(Interest on debentures payable, TDS deducted@10%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
8,100 |
|
|
TDS Collected (Receivable) A/c |
Dr. |
|
900 |
|
|
To Interest Earned A/c |
|
|
|
9,000 |
|
(Being the fixed deposit realised on redemption, interest received@6%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
3,00,000 |
|
|
To Bank A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption paid) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
62,500 |
|
|
To General Reserve A/c |
|
|
|
62,500 |
|
(DRR transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. |
|
60,000 |
|
|
To Debentureholders’ A/c |
|
|
|
54,000 |
|
To TDS Payable A/c |
|
|
|
6,000 |
|
(Interest on debentures payable, TDS deducted@10%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
8,100 |
|
|
TDS Collected (Receivable) A/c |
Dr. |
|
900 |
|
|
To Interest Earned A/c |
|
|
|
9,000 |
|
(Being the fixed deposit realised on redemption, interest received@6%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
3,00,000 |
|
|
To Bank A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption paid) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
62,500 |
|
|
To General Reserve A/c |
|
|
|
62,500 |
|
(DRR transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. |
|
40,000 |
|
|
To Debentureholders’ A/c |
|
|
|
36,000 |
|
To TDS Payable A/c |
|
|
|
4,000 |
|
(Interest on debentures payable, TDS deducted@10%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
8,100 |
|
|
TDS Collected (Receivable) A/c |
Dr. |
|
900 |
|
|
To Interest Earned A/c |
|
|
|
9,000 |
|
(Being the fixed deposit realised on redemption, interest received@6%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
3,00,000 |
|
|
To Bank A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption paid) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
62,500 |
|
|
To General Reserve A/c |
|
|
|
62,500 |
|
(DRR transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
March 31 |
Debenture Interest A/c |
Dr. |
|
20,000 |
|
|
To Debentureholders’ A/c |
|
|
|
18,000 |
|
To TDS Payable A/c |
|
|
|
2,000 |
|
(Interest on debentures payable, TDS deducted@10%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Bank A/c |
Dr. |
|
1,58,100 |
|
|
TDS Collected (Receivable) A/c |
Dr. |
|
900 |
|
|
To Debenture Redemption Investment A/c |
|
|
|
1,50,000 |
|
To Interest Earned A/c |
|
|
|
9,000 |
|
(Being the fixed deposit realised on redemption, interest received@6%) |
|
|
|
|
|
|
|
|
|
|
March 31 |
8% Debentures A/c |
Dr. |
|
2,50,000 |
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
50,000 |
|
|
To Debentureholders’ A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
3,00,000 |
|
|
To Bank A/c |
|
|
|
3,00,000 |
|
(Amount due on redemption paid) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debenture Redemption Reserve A/c |
Dr. |
|
62,500 |
|
|
To General Reserve A/c |
|
|
|
62,500 |
|
(DRR transferred to General Reserve) |
|
|
|
|
View NCERT Solutions for all chapters of Class 15