Question

Y Ltd redeemed 4,800, $12\%$ debentures of Rs 100 each which were issued at par, at 110 per cent by converting them into equity shares of Rs 10 each issued at a discount of $4\%$. Journalise.

Answer 1

$\text{Journal Entries}\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt. (Cr)}\\ & 12\%\text{Debenture A/c}& \text{Dr}& & 4,80,000& \\ & \text{Premium on Redemption of Debenture A/c}& \text{Dr}& & 48,000& \\ & \text{To Debenture Holders A/c}& & & & 5,28,000\\ & \text{(Amount of debentures due to debenture}& & & & \\ & \text{holders)}& & & & \\ & \text{Debenture Holders A/c}(55,000\times 9.60)& \text{Dr}& & 5,28,000& \\ & \text{Discount on Issue of Shares A/c}(55,000\times 0.4)& \text{Dr}& & 22,000& \\ & \text{To Equity Share Capital A/c}(55,000\times 10)& & & & 5,50,000\\ & \text{(Equity shares issued to debenture holder}& & & & \\ & \text{in lieu of debentures )}& & & & \end{array}$

Working Note
amount due ti Debenture Holders = $4,800\times 110=$ Rs 5,28,000
Number of shares to be issued =$\frac{\text{Amount due to Debenture Holders}}{\text{Agreed Price of Share}}$
= $\frac{5,28,000}{9.60}=55,000$ shares