Debenture Redemption Investment

Q.

On April 01, 2014 a company issued 15% debentures of Rs 10, 00, 000 at par. The debentures were redeemable at par after three years from the date of Issue. A sinking fund was set up to raise funds for redemption of debentures. The amount for the purpose was invested in 6% Government securities of Rs 100 each available at par. The sinking fund table shows that if investments earn 6% per annum, to get Re.1 at the end of 3 years, one has to invest Rs 0.31411 every year together with interest that will be earned. On March 31, 2017, all the Government securities were sold at a total loss of Rs 6, 000 and the debentures were redeemed at par.

Prepare Debentures Account Sinking Fund Account, Sinking Fund Investment Account and Interest on Sinking Fund Investment Company closes its books of accounts every year on March 31.

Q.

What is meant by ‘Redemption out of Capital’?

Q. Under which heads the following items are classified or shown on the Assets part of the Balance Sheet of a copany: (i) Loose Tools; (ii) Bills Receivable; (iii) Sundry Debtors: and (iv) Advances Recoverable in Cash?

Q.

Q.

A Ltd purchased its own debentures of the face value of Rs 2, 00, 000 from the open market for immediate cancellation at Rs 92. Pass the journal entries.

Q. Z Ltd. had issued following debentures:
(a) 1, 00, 000, 10% fully convertible debentures of ₹ 100 each on 1st April, 2016 redeemable by conversion after 5 years.
(b) 20, 000, 10% Debentures of ₹ 100 each redeemable after 4 years , 25% Debentures in Cash and 75% by conversion.
State the amount of DRR required to be created as per the Companies Act, 2013.

Q. A company should invest a minimum of of the debentures value under the companies act.

1. 10%
2. 12%
3. 25%
4. 15%

Q. The amount of should be at least transferred to debenture redemption reserve if the debenture value in the balance sheet is Rs 15, 00, 000

1. Rs 3, 50, 000
2. Rs 3, 500
3. Rs 3, 75, 000
4. Rs 37, 500

Q.

PRACTICAL PROBLEMS

Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31^st March, 2011 when their position was as follows:

Balance Sheet as on 31st March, 2011
Liabilities	Amount Rs	Assets		Amount Rs
Sundry Creditors	25, 000	Debtors	1, 12, 500
Bank overdraft	20, 000	Less: R.D.D.	12, 500	1, 00, 000
Reserve Fund	30, 000	Stock		2, 25, 000
Capital Accounts:		Furniture		50, 000
Ganesh	2, 30, 000	Motor Car		75, 000
Chandan	1, 50, 000	Cash in hand		5, 000
	4, 55, 000			4, 55, 000

The Assets realised as follows: Debtors Rs 90, 000, Stock Rs 2, 00, 000, and Goodwill Rs 25, 000, Motor Car was taken over by Ganesh for Rs 70, 000 and Furniture by Chandan for Rs 60, 000.
The Creditors were paid Rs 22, 500 in full settlement. The expenses of realisation amounted to Rs 10, 000.

Pass necessary journal entries in the books of the firm.

Q.

Which account is to be debited while setting aside profits as a reserve?

1. Profit or loss A/c

2. Debenture Redemption Reserve A/c

3. Debenture Redemption Investment A/c

4. Bank A/c

Q.

PRACTICAL PROBLEMS

Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:2:1, following is their Balance Sheet as on 31^st March, 2008.

Balance Sheet as on 31st March, 2008
Liabilities	Amount Rs	Assets		Amount Rs
Capital Accounts:		Machinery		25, 000
Pannalal	30, 000	Stock		10, 000
Babulal	10, 000	Debtors	27, 500
Hiralal	10, 000	Loss: R.D.D.	1, 500	26, 000
General Reserve	3, 000	Investment		12, 000
Creditors	20, 000	Profit and Loss A/c		9, 000
Pannalal’s Loan A/c	4, 000	Bank		2, 000
Bills payable	7, 000
	84, 000			84, 000

On the above date the partners decided to dissolve the firm:

1) Assets were realised: Machinery Rs 22, 500, Stock Rs 9, 000, Investment Rs 10, 500, Debtors Rs 22, 500.

2) Dissolution expenses were Rs 1, 500.

3) Goodwill of the firm realised Rs 12, 000

Pass the necessary Journal entries in the books of the firm.

Q. Difference between debenture redemption reserve and sinking fund

Q. A company should invest a minimum of if the debentures value is Rs. 20, 00, 000.

1. Rs 3, 00, 000
2. Rs 3, 000
3. Rs 3, 75, 000
4. Rs 37, 500

Q.

How much % of the reserved amount should be invested by companies?

1. 15%

2. 10%

3. 50%

4. 25%

Q. Imported Goods confiscated by custom authorities is ______________.

1. Capital Expenditure
2. Revenue Loss
3. Revenue Expenditure
4. Deferred Revenue Expenditure

Q. New R.D.D. is to be deducted from ________.

1. Bad debts
2. Debtors
3. Creditors
4. Cash

Q. Question

Q. Reserve for doubtful debts is created when recovery of bad debts is _________.

1. Certain
2. Recovered
3. Doubtful
4. Not recovered