Question

Pass necessary Journal entries for the issue and redemption of Debentures in the followings cases :

(i) 15,000; $10\%$ Debentures of Rs 100 each issued at $10\%$ premium, repayable at par.

(ii) 6,00,000; $12\%$ Debenture of Rs 500 each issued at $5\%$ premium , repayable at $10\%$ pemium.

Answer 1

JOURNAL

$$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ \text{(i)}& \text{Bank A/c}& \text{Dr}& & 16,50,000& \\ & \text{To}10\%\text{Debenture Application and Allotment A/c}& & & & 15,50,000\\ & \text{Receipt of application money}& & & & \\ & 10\%\text{Debenture Application and Allotment A/c}& \text{Dr}& & 16,50,000& \\ & \text{To}10\%\text{Debenture A/c}& & & & 15,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 1,50,000\\ & \text{(Issue of Debentures at}10\%\text{premium , repayable}& & & & \\ & \text{at par)}& & & & \\ & \text{Surplus in Statement of Profit and Loss}& \text{Dr}& & 3,75,000& \\ & \text{To Debenture Redemption Reserve A/c}& & & & 3,75,000\\ & \text{(Amount transferred to DRR equal to}25\%\text{of the}& & & & \\ & \text{nominal value of debentures issued)}& & & & \\ & \text{Debenture Redemption Investment A/c}& \text{Dr}.& & 2,25,000& \\ & \text{To Bank A/c}& & & & 2,25,000\\ & \text{(Investment made at}15\%\text{of the nominal value of}& & & & \\ & \text{debentures to be redeemed)}& & & & \\ & \text{On Redemption}& & & & \\ & \text{Bank A/c}& \text{Dr}& & 2,25,000& \\ & \text{To Debenture Redemption Investment A/c}& & & & 2,25,000\\ & \text{(Investment encashed)}& & & & \\ & 10\%\text{Debentures A/c}& \text{Dr}& & 15,00,000& \\ & \text{To Debentureholder's A/c}& & & & 15,00,000\\ & \text{(Amount due to debentureholders)}& & & & \\ & \text{Debentureholder's A/c}& \text{Dr}& & 15,00,000& \\ & \text{To Bank A/c}& & & & 15,00,000\\ & \text{(Amount paid to Debentureholders)}& & & & \\ & \text{Debenture Redemption Reserve A/c}& \text{Dr}& & 3,75,000& \\ & \text{To General Reserve A/c}& & & & 3,75,000\\ & \text{(Transfer of DRR to General Reserve after}& & & & \\ & \text{redemption)}& & & & \\ \text{ii}& \text{Bank A/c}& \text{Dr}& & 31,50,00,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 31,50,00,000\\ & \text{(Receipt of application money)}& & & & \\ & 12\%\text{Debenture Application and Allotment A/c}& \text{Dr}& & 31,50,00,000& \\ & \text{Loss on Isue of Debentures A/c}& \text{Dr}& & 3,00,00,000& \\ & \text{To}12\%\text{Debentures A/c}& & & & 30,00,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 1,50,00,000\\ & \text{To Premium on Redemption of Debentures A/c}& & & & 3,00,00,000\\ & \text{(Issue of Debentures at}5\%\text{premium,repayable at)}& & & & \\ & 10\%\text{premium)}& & & & \\ & \text{Surplus in Statement of Profit and Loss}& \text{Dr}& & 7,50,00,000& \\ & \text{To Debenture Redemption Reserve A/c}& & & & 7,50,00,000\\ & \text{(Amount transferred to DRR equal to}25\%\text{of the}& & & & \\ & \text{nominal value of debentures issued)}& & & & \\ & \text{Debenture Redemption Investment A/c}& \text{Dr}.& & 4,50,00,000& \\ & \text{To Bank A/c}& & & & 4,50,00,000\\ & \text{(Investment made at}15\%\text{of the nominal value of}& & & & \\ & \text{debentures to be redeemed)}& & & & \\ & \text{On Redemption}& & & & \\ & \text{Bank A/c}& \text{Dr}& & 4,50,00,000& \\ & \text{To Debenture Redemption Investment A/c}& & & & 4,50,00,000\\ & \text{(Investment encashed)}& & & & \\ & 12\%\text{Debentures A/c}& \text{Dr}& & 30,00,00,000& \\ & \text{Premium on Redemption of Debentures A/c}& & & 3,00,00,000& \\ & \text{To Debentureholder's A/c}& & & & 33,00,00,000\\ & \text{(Amount due to debentureholders)}& & & & \\ & \text{Debentureholder's A/c}& \text{Dr}& & 33,00,00,000& \\ & \text{To Bank A/c}& & & & 33,00,00,000\\ & \text{(Amount paid to Debentureholders)}& & & & \\ & \text{Debenture Redemption Reserve A/c}& \text{Dr}& & 7,50,00,000& \\ & \text{To General Reserve A/c}& & & & 7,50,00,000\\ & \text{(Transfer of DRR to General Reserve after}& & & & \\ & \text{redemption)}& & & & \end{array}$$