Redemption through Payment in Installments

Q.

X.Ltd. issued 15, 000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:

(i) The debentures are issued at a premium of 10%;

(ii) The debentures are issued at a discount of 5%;

(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12, 00, 000; and

(iv) The debentures are issued to a supplier of machinery costing Rs 13, 50, 000.

Q.

Differentiate between redemption of debentures out of capital and out of profits.

Q.

How is ‘Discount on Issue of Debentures’ treated in the books of accounts? How will you deal with the ‘discount in issue of debentures’ when the debentures are to be redeemed in instalments?

Q.

Under which head is the ‘Debenture Redemption Reserve’ shown in the balance sheet.

Q.

After redemption is complete, the balance in Debenture Redemption Reserve is transferred to ___

1. None of these

2. General reserve

3. Debentureholders a/c

4. Debentures a/c

Q. The minimum amount to be set aside for debenture redemption reserve is 25% of the of debentures.

1. face value
2. premium
3. issue price
4. outstanding value

Q.

When debentures are redeemed out of profits, an equal amount is transferred to ___

1. None of these

2. Debenture redemption reserve

3. Debentureholders a/c

4. Debentures a/c

Q.

What is meant by an ‘Irredeemable Debenture’?

Q.

Why would an investor prefer to invest in the debentures of a company rather than in its shares?

Q.

Z.Ltd. issued 2, 000, 14% debentures of Rs.100 each on April 01, 2013 at a discount of 10%, redeemable at a premium of 10% in equal annual drawings in 4 years out of profits.

Give journal entries both at the time of issue and redemption of debentures. (Ignore the treatment of loss on issue of debentures and interest.)

Q.

What is meant by redemption of debentures?

Q.

State which fo the following would result in inflow/outflow of Cash or Cash Equivalents:
(i) Sale of a fixed asset (book value Rs. 15, 000) at a loss of Rs. 5, 000
(ii) Cash received from Trade Receivables Rs. 9, 000 and allowed discount Rs. 1, 000.
(iii) Cash paid to Trade Payables.
(iv) Shares issued for Cash.
(v) Buy- back of Equity Shares.

Q.

ABC Ltd., issued 2, 000, 10% debentures of Rs 100 each on January 01, 2014 at a discount of 10% redeemable at a premium of 10%. Calculate Debenture Interest and TDS for the period ending December 31, 2014 assuming that interest was paid half yearly on June 30 and December 31 and tax deducted at source is 10%. A Ltd., follows calendar year as its accounting year

1. 14, 000

2. None of these

3. 28, 000

4. 52, 000

Q.

Show the following items in the Balance Sheet of X ltd:

$\begin{array}{cc}& Rs.\\ \text{Statement of Profit and Loss (Cr.)}& 70,000\\ \text{9\% Debentures}& 10,00,000\\ \text{Preliminary Expenses}& 1,20,000\\ \text{Discount on Issue of 9\% Debentures}& \\ \text{(Amount to be written of in the next three years)}& 45,000\\ \text{Trade Receivables}& 1,50,000\\ \text{Inventory}& 6,40,000\end{array}$

Totalling of Balance Sheet is not required.

Q.

Which account is credited while making the payment of redemption money to the debentureholders?

1. None of these

2. Bank a/c

3. Debentureholders a/c

4. Debentures a/c

Q. On April 01, 2014, a company made an issue of 5, 000, 8% debentures of Rs 100 each at Rs 94 per debentures. The terms of issue provided for the redemption of 1, 000 debenture every year starting from March 31, 2016 either by purchase from open market or by converting them into Equity shares of Rs 10 each at a premium of Rs 2.50 per share. On March 31, 2016, the company redeemed 1, 000 debentures by converting them into equity shares. Give the necessary journal entries.

Q.

A company issues the following debentures:

(i) 10, 000, 12% debentures of Rs 100 each at par but redeemable at premium of 5% after 5 years;

(ii) 10, 000, 12% debentures of Rs 100 each at a discount of 10% but redeemable at par after 5 years;

(iii) 5, 000, 12% debentures of Rs 1, 000 each at a premium of 5% but redeemable at par after 5 years;

(iv) 1, 000, 12% debentures of Rs 100 each issued to a supplier of machinery costing Rs 95, 000. The debentures are repayable after 5 years; and

(v) 300, 12% debentures of Rs 100 each as a collateral security to a bank which has advanced a loan of Rs 25, 000 to the company for a period of 5 years.

Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period.

Q.

Q.

A.Ltd. redeemed 8, 000, 12% debentures of Rs.100 each which were issued at a discount of 5%, by converting them into equity shares of Rs.10 each at par.

Q.

On January 01, 2002, X.Ltd. issued 40, 000, 9% debentures of Rs.100 each at Rs.95.

The terms of issue provided that, beginning with 1999, Rs.2, 00, 000 debentures should be redeemed either by drawings at par or by purchase in the open market every year. The expenses of issue amounted to Rs.12, 000 which were written-off in 2002. The company also wrote off Rs.40, 000 every year from Discount on Debentures Account. At the end of 2004, debentures to be redeemed were repaid by drawings. During 2005, the company purchased for cancellation 2, 000 debentures at the market price of Rs.98 on December 31, the expenses being Rs.400. Interest on debentures is payable at the end of every calendar year.

Pass the journal entries in the books of the company to record these transactions.

Q.

X.Ltd. issued 5, 000, 15% debentures of Rs.100 each on April 01, 2013 at a discount of 10%, redeemable at a premium of 10% in equal annual drawings in 4 years out of capital.

Give journal entries both at the time of issue and redemption of debentures. (Ignore the treatment of loss on issue of debentures and interest.)

Q. For debenture redemption investment, 15% of redemption value should be invested before of the same financial year.

1. 7th September
2. 30th April
3. 30th June
4. 18th August

Q.

ABC Ltd. issued 3, 000, 14% Debentures of Rs 100 each at a discount of 5% on January 1, 2012. The debentures are redeemable at par in three equal instalments at the end of the third, fourth and fifth year. What is the value of debentures redeemable at the end of fifth year?

1. 3000

2. None of these

3. 2000

4. 1000

Q.

What are authorized shares?

Q.

If the debentures are to be redeemed in instalments, the redemption is made out of ___

1. None of these

2. Profits or Capital

3. Capital

4. Profits

Q. On 31st March, 2018, the Cash Book of Rohan showed an overdraft of Rs. 5, 600.
From the following particulars, prepare Bank reconciliation Staetment:
(i) Cheques issued but not credited before 31st March, 2018 amounted to Rs. 3, 964.
(ii) Cheques deposited into the bank but not credited before 31st March, 2018 amounted to Rs. 4, 891.
(iii) A Bill Recievable for Rs. 520 previously discounted with the bank had been dishonoured and bank charges debited in the pass book amounted to Rs. 55
(iv) Debit is made in the Pass Book for Rs. 120 on account of interest on overdraft.
(v) The bank has collected interest on investment and credited Rs. 760 in the Pass Book.

Q. Which of the following statements is/are true?
(i) Cash book records all cash receipts and cash payments.
(ii) Cash book records all sale and purchase transactions of goods both in cash and on credit.
(iii) Cash book records discount on cash payments
Select the correct answer from the options given below :-

1. Both (i) and (iii) of the above
2. Only (i) of the above
3. Only (ii) of the above
4. Only (iii) of the above

Q.

Anil and Sunil are partners in a firm with fixed capitals of $Rs.3,20,000$ and $Rs.2,40,000$ respectively. They admitted Charu as a new partner for $1/4^{th}$ share in the profits of the firm on $1^{st}$April, 2012. Charu brought $Rs.3,20,000$ as her share of capital. Give the necessary journal entries on Charu's admission with regard to capital and goodwill.

Q.

Y.Ltd. redeemed 4, 800, 12% debentures of Rs.100 each which were issued at par, at 110 per cent by converting them into equity shares of Rs.10 each issued at a discount of 4%. Journalise.

Q. On 31st March, 2018, Bank Statement of a merchant shows a credit balance of Rs. 33, 750 whereas Cash Book showed debit balance of Rs. 50, 000.
It was observed that the difference were because of the following:
(i) Cheques and drafts sent to the bank but not collected and credited, amounted to Rs. 7, 900 and three cheques drawn for rs. 3, 000; Rs. 1, 500 and Rs. 2, 000 respectively were not presented for payment till 30th April, 2018.
(ii) Bank has paid a bill payable amounting to Rs. 10, 000 but it has not been entered in the Cash Book and a bill receivable of Rs. 5, 000 which was discounted with the bank was dishonoured by the drawee on the due date.
(iii) Bank has charged Rs. 130 as its commission for collecting outstation cheques and had credited an interest of Rs. 100 in the account.
Prepare Bank Reconciliation Statement as on 31st March, 2018