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.

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Solution

In the books of A. Ltd.

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

12% Debenture A/c

Dr.

8,00,000

To Debenture Holders

7,60,000

To Discount on Issue of Debentures A/c

40,000

(Amount of 12% Debentures due to Debenture Holders)

Debenture Holders

Dr.

7,60,000

To Equity Share Capital A/c

7,60,000

(Equity Shares issued to Debenture Holders in lieu of debentures)

Note: Here it has been assumed that the debentures are converted into equity shares before the date of redemption. If the debentures are converted into shares before maturity, then the net proceeds from the issue of debentures will be taken at the time of conversion.

Working Notes:-

Number of Shares to be issued

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Similar questions

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.

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. 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. Pass necessary journal entries in the following cases :
(i)

Z

Ltd redeemed

1500

12 %

debentures of Rs

100

each issued at a discount of

6 %

by converting them into equity shares of Rs

100

each issued at a premium of Rs

25

per share.
(ii)

X

Ltd. converted

1, 000, 12 %

debentures of Rs

100

each issued at a discount of Rs

10

per debenture into equity shares of Rs

100

each Rs

90

paid up.

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In the books of A. Ltd.
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	12% Debenture A/c	Dr.		8,00,000
	To Debenture Holders				7,60,000
	To Discount on Issue of Debentures A/c				40,000
	(Amount of 12% Debentures due to Debenture Holders)

	Debenture Holders	Dr.		7,60,000
	To Equity Share Capital A/c				7,60,000
	(Equity Shares issued to Debenture Holders in lieu of debentures)

Note: Here it has been assumed that the debentures are converted into equity shares before the date of redemption. If the debentures are converted into shares before maturity, then the net proceeds from the issue of debentures will be taken at the time of conversion.