Class 12 Accountancy Chapter 10- Redemption of Debentures

Ts Grewal Solutions for Class 12 Accountancy Vol 2 Chapter 10:

TS Grewal Solutions for Class 12 Accountancy Chapter 10- Redemption of Debentures is an elementary concept to be learned by the students. Click here to learn more about TS Grewal Accountancy solutions for class 12 in a simple and a step by step method, which is beneficial for the students to score well in their upcoming board exams.

Class 12 TS Grewal Solutions Accountancy Vol 2 Chapter 10:-Download PDF Here

Board CBSE
Class Class 12
Subject Accountancy
Chapter Chapter 10
Chapter Name Redemption of Debentures
Number of questions solved 07
Category TS Grewal

Also Check: Important Questions for Redemption of Debentures

TS Grewal Solutions for Class 12 Accountancy Chapter 10 – Redemption of Debentures

Question 1

The provisions of the Companies Act, 2013 in respect of redemption of debentures are to protect the interest of,

  • Debentureholders
  • Creditors
  • Shareholders
  • Bankers

Answer: Debentureholders

Question 2

Central Bank Ltd. is to redeem 40,000. 10% debentures of ₹. 100/- each on 31st December 2018. How much amount should it invest in specified securities?

  • ₹. 6,00,000/-
  • ₹. 10,00,000/-
  • ₹. 5,00,000/-
  • Nil

Answer: ₹. 6,00,000/-

Question 3

SBI Ltd. has outstanding 1,00,000; 10% debentures ₹.10/- each issued in 2005 due for redemption on 30th June 2018.  How much amount of debentures redemption reserve must be created before the redemption of debentures begins and also how much amount should it invest in specified securities?

Pass necessary journal entries at the time of redemption of debentures.

Solution:

JOURNAL OF SBI LTD.
Date Particulars L.F. Dr. (₹) Cr. (₹)
June 30

2018

10% Debentures A/c                                             Dr. 10,00,000
   To Debentureholders’ A/c 10,00,000
(Being the amount due to debenture holders on redemption)
Debentureholders’ A/c                                          Dr. 10,00,000
   To Bank A/c 10,00,000
(Being the amount due to the debenture holders paid)

Question 4

ABC Ltd. issued 1,00,000; 9% debentures of ₹.50/- each @ a premium of 10% on June 30th, 2016 redeemable on 31st March, 2018. The issue was fully subscribed. The company decided to transfer the amount to DRR on 31st March 2017 and invest in Fixed Deposit earning interest @ 10% p.a. on 1st April 2017 to meet the legal requirement. The tax was deducted at source (TDS) by the bank @ 10%.

Pass the necessary journal entries for issue and redemption of debentures along with the interest on the investment.

Solution:

JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)
June 30, 2016 Bank A/c                                                                  Dr. 55,00,000
   To Debentures Application and Allotment A/c 55,00,000
(Being the application money received at a premium of 10%)
June 30 Debentures Application and Allotment A/c            Dr. 55,00,000
   To 9% Debentures A/c 50,00,000
   To Securities Premium Reserve A/c 5,00,000
(Being the application money transferred to 9% debentures and securities premium reserve account)
March 31, 2017 Surplus, i.e., Balance in statement of P&L A/c        Dr. 12,50,000
   To Debentures redemption reserve A/c 12,50,000
(Being 25% of the value of outstanding debentures transferred to DRR)
April 1 Debentures redemption investment A/c                    Dr. 7,50,000
   To Bank A/c 7,50,000
(Being 15% of the value of debentures to be redeemed invested in Government securities)
March 31, 2018 Bank A/c                                                                    Dr. 8,17,500
TDS collected A/c                                                     Dr. 7,500
   To Debentures redemption investment A/c 7,50,000
   To Interest earned A/c 75,000
(Being the investments bearing 10% interest p.a. realised on the redemption of debentures; TDS deducted @ 10% on interest)
March 31 9% Debentures A/c                                                    Dr. 50,00,000
   To Debentureholders’ A/c 50,00,000
(Being the amount due on redemption of debentures)
March 31 Debentureholders’ A/c                                              Dr. 50,00,000
   To Bank A/c 50,00,000
(Being the payment made to redeem the debentures)
March 31 Debentures redemption reserve A/c                          Dr. 12,50,000
   To General reserve A/c 12,50,000
(Being the DRR transferred to general reserve after redemption of debentures)
March 31 Interest earned A/c                                                     Dr. 75,000
   To Statement of P&L A/c 75,000
(Being the interest earned on DRI transferred to the statement of P&L)

Question 5

The premium payable on redemption of debentures is in the nature of,

  • Liability account
  • Asset account
  • Expense account
  • None of these

Answer: Liability account

Question 6

A public limited company is a manufacturer of chemical fertilisers. It’s annual turnover is ₹. 50 crores. The company had issued 5,000, 12% debentures of ₹. 500/- each at par. Calculate the amount of debentures redemption reserve which needs to be created to meet the requirements of law.

Answer : Required Debentures Redemption Reserve (DRR)  = 25% of redemption value

                                                                                                  = 25% X 25,00000

                                                                                                  = ₹ 6,25,000

Question 7

On March 31st 2013, P Ltd. had ₹.8,00,000/-; 9% debentures due for redemption. The company had a balance of ₹. 1,40,000/- in its DRR. Calculate the amount transferred to be in DRR.

Answer: Amount transferred to DRR = 25% of redemption value

                                                              = (25% X ₹ 8,00,000) – ₹1,40,000

                                                              = ₹60,000

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