Question

The following balances appeared in the books of A Ltd. On January 1, 2011

$\begin{array}{cc}\text{Items}& \text{(Rs)}\\ \text{12\% Debentures}& 4,00,000\\ \text{Debentures Redemption Fund}& 3,60,000\\ \text{Debentures Redemption Fund Investment}& 3,60,000\\ \text{Securities Premium}& 30,000\\ \text{Bank Balance}& 1,00,000\end{array}$

On January 1, 2011, the company redeemed all the debentures at 105% out of funds raised by selling all the investments at Rs. 3,48,000. Prepare the necessary ledger accounts.

Answer 1

$\text{Dr}\text{12\% Debentures Account}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Debenture}& & 4,00,000& \text{Jan 1}& \text{Balance b/d}& & 4,00,000\\ & \text{Holders}& & & & & & \\ & & & \underset{–}{\overline{\underset{–}{4,00,000}}}& & & & \underset{–}{\overline{\underset{–}{4,00,000}}}\end{array}$

$\text{Dr}\text{Debenture Redemption Reserve Fund Account}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Debenture}& & & \text{Jan 1}& \text{Balance}& & \\ & \text{Redemption}& & 12,000& & \text{b/d}& & 3,60,000\\ & \text{Fund Investment}& & & & & & \\ & \text{General Reserve}& & 3,48,000& & & & \\ & & & \underset{–}{\overline{\underset{–}{3,60,000}}}& & & & \underset{–}{\overline{\underset{–}{3,60,000}}}\end{array}$

$\text{Dr}\text{Debenture Redemption Reserve Fund Investment Account}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Balance b/d}& & 3,60,000& \text{Jan 1}& \text{Bank}& & 3,48,000\\ & & & & & \text{Debentures}& & 12,000\\ & & & & & \text{Redemption}& & \\ & & & & & \text{Fund (Loss)}& & \\ & & & \underset{–}{\overline{\underset{–}{3,60,000}}}& & & & \underset{–}{\overline{\underset{–}{3,60,000}}}\end{array}$

$\text{Dr}\text{Cash Book (Bank Column)}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Balance b/d}& & 1,00,000& \text{Jan 1}& \text{Debenture}& & 4,20,000\\ & & & & & \text{Holders}& & \\ & \text{Debentures}& & & & \text{Balance c/d}& & 28,000\\ & \text{Redemption}& & & & & & \\ & \text{Fund Investment}& & 3,48,000& & & & \\ & & & \underset{–}{\overline{\underset{–}{4,48,000}}}& & & & \underset{–}{\overline{\underset{–}{4,48,000}}}\end{array}$

$\text{Dr}\text{Securities Premium Account}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Premium on}& & 20,000& \text{Jan 1}& \text{Balance b/d}& & 30,000\\ & \text{Redemption}& & & & & & \\ & \text{of Debentures}& & & & & & \\ & \text{Balance c/d}& & 10,000& & & & \\ & & & \underset{–}{\overline{\underset{–}{30,000}}}& & & & \underset{–}{\overline{\underset{–}{30,000}}}\end{array}$

$\text{Dr}\text{Debenture Holder's}\text{Cr}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2011& & & & 2011& & & \\ \text{Jan 1}& \text{Bank}& & 4,20,000& \text{Jan 1}& \text{Debentures}& & 4,00,000\\ & & & & & \text{Premium on}& & 20,000\\ & & & & & \text{Redemption}& & \\ & & & & & \text{of Debentures}& & \\ & & & \underset{–}{\overline{\underset{–}{4,20,000}}}& & & & \underset{–}{\overline{\underset{–}{4,20,000}}}\end{array}$