On 1st April, 2013 the following balances appeared in the books of Blue and Green Ltd.:
12%Debentures (Redeemable on 31st August, 2015) ₹ 20,00,000
Debentures Redemption Reserve ₹ 2,00,000.
The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures.
Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of company.
12%Debentures (Redeemable on 31st August, 2015) ₹ 20,00,000
Debentures Redemption Reserve ₹ 2,00,000.
The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures.
Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of company.
Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2015
Mar.31
Surplus i.e., Balance in statement of Profit & Loss A/c
Dr.
3,00,000
To Debentures Redemption Reserve A/c
3,00,000
(Amount transferred to DRR)
Apr.30
Debenture Redemption Investment A/c
Dr.
3,00,000
To Bank A/c
3,00,000
(Amount invested in specified security)
Aug.31
Bank A/c
Dr.
3,00,000
To Debenture Redemption Investment A/c
3,00,000
(Debenture Redemption Investment realized)
Aug.31
9% Debenture A/c
Dr.
20,00,000
To Debenture holder’s A/c
20,00,000
(Debenture due for redemption)
Aug.31
Debenture holder’s A/c
Dr.
20,00,000
To Bank A/c
20,00,000
(Debentures redeemed)
Aug.31
Debentures Redemption Reserve A/c Dr.
5,00,000
To General Reserve A/c
5,00,000
(Debentures Redemption Reserve transferred to General Reserve)
Working Notes:
Amount required to be transferred to DRR = 25% of Face Value of Debentures
= 25% of Rs 20,00,000 = Rs 5,00,000
Existing Balance in DRR = Rs 2,00,000
Therefore, Amount transferred to DRR = Rs 5,00,000 – 2,00,000 = Rs 3,00,000
Amount required to be transferred to DRI = 15% of Face Value of Debentures
= 15% of Rs 20,00,000 = Rs 3,00,000
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
2015 |
|
|
|
|
|
|
Mar.31 |
Surplus i.e., Balance in statement of Profit & Loss A/c |
Dr. |
|
3,00,000 |
|
|
|
To Debentures Redemption Reserve A/c |
|
|
|
3,00,000 |
|
|
(Amount transferred to DRR) |
|
|
|
|
|
|
|
|
|
|
|
|
Apr.30 |
Debenture Redemption Investment A/c |
Dr. |
|
3,00,000 |
|
|
|
To Bank A/c |
|
|
|
3,00,000 |
|
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
|
|
|
Aug.31 |
Bank A/c |
Dr. |
|
3,00,000 |
|
|
|
To Debenture Redemption Investment A/c |
|
|
|
3,00,000 |
|
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
|
|
Aug.31 |
9% Debenture A/c |
Dr. |
|
20,00,000 |
|
|
|
To Debenture holder’s A/c |
|
|
|
20,00,000 |
|
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
|
|
Aug.31 |
Debenture holder’s A/c |
Dr. |
|
20,00,000 |
|
|
|
To Bank A/c |
|
|
|
20,00,000 |
|
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
|
|
Aug.31 |
Debentures Redemption Reserve A/c Dr. |
|
5,00,000 |
|
|
|
|
To General Reserve A/c |
|
|
5,00,000 |
|
|
|
(Debentures Redemption Reserve transferred to General Reserve) |
|
|
|
|
|
|
|
|
|
|
|
Working Notes:
Amount required to be transferred to DRR = 25% of Face Value of Debentures
= 25% of Rs 20,00,000 = Rs 5,00,000
Existing Balance in DRR = Rs 2,00,000
Therefore, Amount transferred to DRR = Rs 5,00,000 – 2,00,000 = Rs 3,00,000
Amount required to be transferred to DRI = 15% of Face Value of Debentures
= 15% of Rs 20,00,000 = Rs 3,00,000
