Question

Pass necessary journal entries in the given case

Pharma Ltd. redeemed 2,500, 12% debentures of Rs 100 each issued at a discount of 6% by converting them into equity shares of  Rs 100 each issued at a premium of 25%.

Answer 1

Pharma Ltd. Journal
Date	Particulars	L.F	Dr. Rs	Cr. Rs
	12% Debenture A/c        Dr.     To Debenture holder A/c     To Discount on Issue of Debenture A/c (Being 2,500 12% debenture of Rs 100 each issue at a discount of 6% due for redemption)		2,50,000	2,35,000 15,000
	Debenture A/c      Dr.    To Equity Share Capital A/c    To Securities premium A/c (Being 1,880 equity share of Rs 100 each issued at the premium of 25% debenture holders)		2,35,000	1,88,000 47,000

Working Note:

Number of shares to be issued = `"Amount Payable"/"Issue Price"` = `"2,35,000"/"125" = 1,880` share