Books of HP Ltd. |
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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2015 |
|
|
|
|
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March 31 |
Statement of Profit and Loss |
Dr. |
|
7,50,000 |
|
||
|
To Debenture Redemption Reserve |
|
|
7,50,000 |
|||
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|||
|
|
|
|
|
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April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
|
To Bank A/c |
|
|
1,50,000 |
||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in first instalment, i.e. Rs 10,00,000) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
8% Debenture A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
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|
|
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|
|
|
|
|
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June 30 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
June 30 |
Debenture Redemption Reserve A/c Dr. |
2,50,000 | |||||
To General Reserve | 2,50,000 | ||||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||||
|
|
|
|
|
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2016 |
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in second instalment, i.e. Rs 10,00,000) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debenture holders) |
|
|
|
|||
June 30 |
Debenture Redemption Reserve A/c Dr. |
2,50,000 | |||||
To General Reserve | 2,50,000 | ||||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||||
2017 |
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in third instalment, i.e. Rs 10,00,000) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debentureholders’ A/c |
|
10,00,000 |
|
|||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
June 30 |
Debenture Redemption Reserve A/c Dr. |
2,50,000 | |||||
To General Reserve | 2,50,000 | ||||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||||
|
|
|
|
|
|||
2018 |
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fourth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
June 30 |
Debenture Redemption Reserve A/c Dr. |
2,50,000 | |||||
To General Reserve | 2,50,000 | ||||||
(Debenture Redemption Reserve transferred to General Reserve) | |||||||
|
|
|
|
|
|||
2019 |
|
|
|
|
|||
April 30 |
Debenture Redemption Investment A/c* |
Dr. |
|
1,50,000 |
|
||
|
To Bank A/c |
|
|
1,50,000 |
|||
|
(Investment is made in specified securities @ 15% of the value of debentures redeemable in fifth instalment, i.e. Rs 10,00,000) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
8% Debentures A/c |
Dr. |
|
10,00,000 |
|
||
|
To Debentureholders’ A/c |
|
|
10,00,000 |
|||
|
(20,000 8% Debenture of Rs 50 each due for redemption) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Bank A/c |
Dr. |
|
1,50,000 |
|
||
|
To Debenture Redemption Investment A/c** |
|
|
1,50,000 |
|||
|
(Investment made in securities, now encashed) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debentureholders’ A/c |
Dr. |
|
10,00,000 |
|
||
|
To Bank A/c |
|
|
10,00,000 |
|||
|
(Payment made to debentureholders) |
|
|
|
|||
|
|
|
|
|
|||
June 30 |
Debenture Redemption Reserve A/c |
Dr. |
|
2,50,000 |
|
||
|
To General Reserve A/c |
|
|
2,50,000 |
|||
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|||
|
|
|
|
|
*As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accodingly, entry for investment in Government securities has been passed a year before first redemption year.
**Since nothing is specified, investments will be encashed before debentures are redeemed.
Note: Since the question is silent regarding the payment of interest, the following entries may be passed at the end of every year (i.e. on 31 March before the redemption of debentures). However, it is not essential to pass these entries unless explicitly stated in the question.
Debenture Interest A/c | Dr. | Interest Rate Amt. of Debentures outstanding |
To Debentureholders’ A/c | ||
(Interest due) | ||
Debentureholders’ A/c | Dr. | |
To Bank A/c | ||
(Payment of interest to debentureholders’) | ||
With the total amount of interest paid in a year | ||
Statement of Profit and Loss | Dr. | |
To Debenture Interest A/c | ||
(Transfer of debenture interest to Statement of Profit and Loss) |