Question

Surya Ltd. (an unlisted company) redeemed its 15,000, 10% Debentures of ₹100 each as follows:

On 31st March 2022	5,000 Debentures
On 1st Jan. 2023	7,000 Debentures
On 31st Dec. 2024	3,000 Debentures

Prepare:

1. Debenture Redemption Reserve Account
2. Debenture Redemption Investment Account.

Answer 1

Dr.	Debenture Redemption Reserve (DRR) Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2020-2021			2020-2021
31 Mar 2021	To Statement of P & L A/c (DRR Transfer)	1,50,000	31 Mar 2022	By Balance c/d	1,50,000
		1,50,000			1,50,000
2021-2022			2021-2022
1 Apr 2022	To Balance b/d	1,50,000	31 Mar 2022	By General Reserve A/c	50,000
			31 Mar 2022	By Balance c/d	1,00,000
		1,50,000			1,50,000
2022-2023			2022-2023
1 Apr 2022	To Balance b/d	1,00,000	1 Jan 2023	By General Reserve A/c	70,000
			31 Mar 2023	By Balance c/d	30,000
		1,00,000			1,00,000
2024-2025			2024-2025
1 Apr 2024	To Balance b/d	30,000	31 Dec 2024	By Balance c/d	30,000
		30,000			30,000

 

Debenture Redemption Investment (DRI) Account
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2021-2022			2021-2022
30 Apr 2021	To Bank A/c	75,000		By Bank A/c	75,000
		75,000			75,000
2022-2023			2022-2023
30 Apr 2022	To Bank A/c	1,05,000	1 Jan 2023	By Bank A/c	1,05,000
		1,05,000			1,05,000
2024-2025			2024-2025
30 Apr 2024	To Bank A/c	45,000	31 Dec 2024	By Bank A/c	45,000
		45,000			45,000

Working Note:

1) Total Debentures:

15,000 × ₹ 100 = ₹ 15,00,000

2) Redemption Schedule:

• 5,000 on 31/03/2022 → ₹ 5,00,000
• 7,000 on 01/01/2023 → ₹ 7,00,000
• 3,000 on 31/12/2024 → ₹ 3,00,000

3) DRI Requirement (15%):

• For ₹ 5,00,000 → ₹ 75,000 (on 30/04/2021)
• For ₹ 7,00,000 → ₹ 1,05,000 → ₹ 45,000 more needed on 30/04/2022
• For ₹ 3,00,000 → ₹ 45,000 → rounded to ₹ 15,000 on 30/04/2024

4) DRR Requirement (10%):

• ₹1,50,000 for full ₹ 15,00,000
• Transferred in parts: ₹ 75,000 on 31/03/2021, ₹ 75,000 on 31/03/2022
• Transferred to General Reserve proportionally on redemption dates.