Alpha Ltd. has 10,000, 8% Debentures of Rs 100 each due for redemption on 31st March 2018. Debenture Redemption Reserve has a balance of Rs 1,90,000 on 31st March,2017. It was decided to invest the required amount towards Debenture Redemption Investment. Investments were realised at 104% less 0.5% brokerage and debentures were redeemed. Record the necessary entries for the redemption of debentures.
Books of Alpha Ltd JOURNAL
(1) Amount realised from sale of investment :Rs 1,50,000×104100=1,56,000 Less: Brokerage 1,56,000×0.5100=780¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,55,220––––––––––––––––––––
(2) Total Amount realised from transfer toRs Debenture Redemption Reserve 25% of 10,00,000=2,50,000 Less:Existing Balance =1,90,000 Amount now required to be transferred to Debenture Redemption Reserve¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯60,000––––––––––––––––