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प्रश्न
Manish Ltd. issued ₹ 40,00,000; 8% Debentures of ₹ 100 each on 1st April, 2017. The terms of issue stated that the debentures are to be redeemed at a premium of 5% on 30th June, 2019. The company decided to transfer ₹ 10,00,000 out of profits to Debentures Redemption Reserve on 31st March, 2018 and ₹ 10,00,000 on 31st March, 2019.
Pass Journal entries regarding the issue and redemption of debentures, DRR and Investment without providing for the interest or loss on issue of debentures.
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उत्तर
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
2017 |
|
|
|
|
|
|
April 01 |
Bank A/c |
Dr. |
|
40,00,000 |
|
|
|
To Debenture Application A/c |
|
|
40,00,000 |
|
|
|
(Debenture application money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
40,00,000 |
|
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
2,00,000 |
|
|
|
To 8% Debentures A/c |
|
|
40,00,000 |
|
|
|
To Premium on Redemption of Debenture |
|
|
2,00,000 |
|
|
|
(Debenture issued with the term repayable at 5% premium) |
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
|
|
|
March, 31 |
Statement of Profit and Loss (See Note 1) |
Dr. |
|
10,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
10,00,000 |
|
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
March 31 |
Statement of Profit and Loss (See Note 1) |
Dr. |
|
10,00,000 |
|
|
|
To Debenture Redemption Reserve A/c |
|
|
10,00,000 |
|
|
|
(Surplus amount is transferred to Debenture Redemption Reserve) |
|
|
|
|
|
|
|
|
|
|
|
|
April 30 |
Debenture Redemption Investment A/c (See Note 2) |
Dr. |
|
6,00,000 |
|
|
|
To Bank A/c |
|
|
6,00,000 |
|
|
|
(Investment is made in specified securities equal to 15% of the value of debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
8% Debentures A/c |
Dr. |
|
40,00,000 |
|
|
|
Premium on Redemption of Debenture A/c |
Dr. |
|
2,00,000 |
|
|
|
To Debentureholders’ A/c |
|
|
42,00,000 |
|
|
|
(Debenture due for redemption along with premium) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
Bank A/c |
Dr. |
|
6,00,000 |
|
|
|
To Debenture Redemption Investment A/c |
|
|
|
6,00,000 |
|
|
(Investment made in securities, now encashed) |
|
|
|
|
| June 30 | Debentureholders’ A/c | Dr. | 42,00,000 | ||
| To Bank A/c | 42,00,000 | ||||
| (Amount paid to Debentureholders) | |||||
|
|
|
|
|
|
|
|
June 30 |
Debenture Redemption Reserve A/c |
Dr. |
|
20,00,000 |
|
|
|
To General Reserve A/c |
|
|
20,00,000 |
|
|
|
(Debenture Redemption Reserve transferred to General Reserve) |
|
|
|
|
Note:
1. As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. However, it purely depends upon a company and its discretion to transfer more amount to DRR than the prescribed amount of 25% in the case of companies for whom it is mandatory to create DRR out of profits. In this case, as explicitly specified about company's discretion, DRR has been created for a total of Rs 20,00,000 which is 50% of the total value of redeemable debentures.
2. As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.
3. As explicilty stated in the question, entries for interest on debentures has not been passed.
APPEARS IN
संबंधित प्रश्न
Pass the necessary journal entries for the issue and redemption of Debentures in the following cases:
(i) 15,000, 9% Debentures of Rs 250 each issued at 5% premium, repayable at 15% premium.
(ii) 2,00,000, 12% Debentures of Rs 10 each issued at 8% premium, repayable at par.
X Ltd. had Rs 10,00,00 9% debentures due to be redeemed out of profits on 1st October 2009 at a premium of 5%. The company had a
Debentures Redemption Reserve of Rs 4,14,000. Pass necessary journal entries at the time of redemption.
Star Ltd. is a manufacturer of chemical fertilisers. Its annual turnover is ₹ 50 crores. The company had issued 5,000, 12% Debentures of ₹ 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.
Dow Ltd. issued ₹ 2,00,000; 8% Debentures of ₹ 10 each at a premium of 8% on 30th June, 2016 redeemable on 31st March, 2018. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures?
On 31st March, 2003, G Ltd. had ₹ 8,00,000;9% Debentures due for redemption. The company had a balance of ₹ 1,40,000 in its Debentures Redemption Reserve . Pass necessary journal entries for redemption of debentures.
| On 31st March, 2018, W Ltd. had the following balances in its books: | ₹ |
| 9% Debentures | 6,00,000 |
| Debentures Redemption Reserve | 50,000 |
| Surplus,i.e., Balance in Statement of Profit and Loss | 3,00,000 |
On that date, the company decided to transfer ₹ 1,00,000 to Debentures Redemption Reserve. It also decided to redeem debentures of ₹ 3,00,000 on 30th June, 2018.
Pass necessary Journal entries in the books of the company.
Godrej Ltd. has 20,000; 7% Debentures of ₹ 100 each due for redemption on 31st August, 2018. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March, 2016. Investment, as required by the Companies Act, 2013 is made on 1st April, 2017 in fixed deposit bearing interest @ 6% p.a. Bank deducted TDS @ 10% on its maturity which is 31st March, 2018.
Pass Journal entries for redemption of debentures.
Apollo Ltd.issued 21,000; 8% Debentures of ₹ 100 each on 1st April, 2013 redeemable at a premium of 8% on 30th June, 2019. The company decided to transfer the required amount to Debentures Redemption Reserve in three equal annual instalments starting with 31st March, 2017. Required investment was made in Government Securities on 30th April, 2019. Ignore interest on debentures and also investment.
Pass necessary Journal entries regarding issue, transfer to DRR, investment, and redemption of debentures.
Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013. The debentures were redeemable at a premium of 5% on 30th June, 2015. The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015. Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.
Ignoring interest on fixed deposit ,pass necessary journal entries starting from 31st March, 2015 regarding redemption of debentures .
Tata Motors Ltd. issued 40,000;7% Debentures of ₹ 100 each on 1st July,2009 redeemable at premium of 5% as under:
On 31st March,2015 16,000 Debentures
On 31st March,2016 16,000 Debentures
On 31st March,2017 8,000 Debentures
It was decided to transfer amount out of profit to Debentures Redemption Reserve ₹ 2,00,000 on 31st March, 2012; ₹ 4,00,000 on 31st March , 2013 and balance on 31st March, 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realise them after last redemption . Paas journal entries ignoring interest .
Shahi Ltd. decided to redeem its 8,000, 11% debentures of ₹ 100 each at a premium of 10%. The minimum amount transferred to the debenture redemption reserve will be:
Choose the appropriate alternative from the given options:
Madura Ltd. decided to redeem its 10,000, 10% debentures of ₹100 each at a premium of 8%. The minimum amount transferred to debenture redemption reserve will be :
On 1st April 2015, Mayfair Ltd. issued 4,000 9% debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 8%. The debentures were redeemable on 31st March 2019. The company created the necessary minimum amount of debenture redemption reserve and purchased the required amount of debenture redemption investments as per the provisions of Companies Act, 2013.
Pass the necessary journal entries for the redemption of debentures.
Relay Ltd. (an unlisted Non NBFC) redeems its 8,000, 10% Debentures of ₹ 100 each in instalments as follows:
| Date of Redemption | Debentures to be redeemed |
| 31st March, 2019 | 2,000 |
| 31st March, 2020 | 5,000 |
| 31st March, 2021 | 1,000 |
On the basis of the above details, what will be the amount of Debenture Redemption Reserve which the company will transfer to General Reserve on 31st March, 2021?
Jerome Ltd., an unlisted manufacturing company, had 20,000, 6% Debentures of ₹100 each due for redemption at par on 31st March, 2022. On this date the company had the required amount of ₹ 2,00,000 in its Debenture Redemption Reserve.
The Debenture Redemption Investment which was purchased on 30th April, 2021, was realised at 98% on the date of redemption and the debentures were redeemed on the due date.
You are required to pass journal entries in the books of the company for the year 2021-22. (Ignore interest on debentures).
On 1st April, 2022, the following balances appeared in the books of Alpha Pvt. Ltd.
| 9% Debentures redeemable on 31st March, 2023, at a premium of 2% | ₹ 50,00,000 |
| Debenture Redemption Reserve | ₹ 5,00,000 |
The Debenture Redemption Investment, which was purchased by the company on 1st April, 2022, was realised at 101% on the date of redemption and the debentures were redeemed on the due date.
You are required to prepare the following accounts for the year 2022-23 in the books of Alpha Pvt. Ltd.
- Debenture holders’ Account.
- Debenture Redemption Investment Account.
