Question

Tata Power Ltd. (an unlisted company) issued 90,000, 9% Debentures of ₹ 100 each on July 1, 2018 redeemable at a premium of 5% as under:

On March 31, 2022	30,000 Debentures
On March 31, 2023	25,000 Debentures
On March 31, 2024	35,000 Debentures

It was decided to transfer to Debenture Redemption Reserve ₹ 2,00,000 on March 31, 2019; ₹ 3,00,000 on March 31, 2020 and the balance on March 31, 2021. Record necessary journal entries, ignoring for interest.

Answer 1

1. Transfer to Debenture Redemption Reserve:

Journal entries of Tata Power Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
31-03-2019	Profit & Loss A/c   ...Dr.		2,00,000	-
	To Debenture Redemption Reserve A/c		-	2,00,000
	(Being amount transferred to DRR)
31-03-2020	Profit & Loss A/c   ...Dr.		3,00,000	-
	To Debenture Redemption Reserve A/c		-	3,00,000
	(Being amount transferred to DRR)
31-03-2021	Profit & Loss A/c   ...Dr		4,00,000	-
	To Debenture Redemption Reserve A/c		-	4,00,000
	(Being balance transferred to DRR to meet requirement)

2. Debenture Redemption Investment:

Journal entries of Tata Power Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
30-04-2021	Debenture Redemption Investment A/c   ...Dr.		4,50,000	-
	To Bank A/c		-	4,50,000
	(Being investment made as per Companies Act)
31-03-2022	Bank A/c   ...Dr.		75,000	-
	To Debenture Redemption Investment A/c		-	75,000
	(Being DRI encashed on redemption)
30-04-2023	Debenture Redemption Investment A/c   ...Dr.		1,50,000	-
	To Bank A/c		-	1,50,000
	(Being DRI made for 2024 redemption)
31-03-2024	Bank A/c   ...Dr.		5,25,000	-
	To Debenture Redemption Investment A/c		-	5,25,000
	(Being final DRI encashed on redemption)

2. Transfer of DRR to General Reserve on redemption of debentures:

Journal entries of Tata Power Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
31-03-2022	Debenture Redemption Reserve A/c   ...Dr.		3,00,000	-
	To General Reserve A/c		-	3,00,000
	(Being DRR transferred post redemption)
31-03-2023	Debenture Redemption Reserve A/c   ...Dr.		2,50,000	-
	To General Reserve A/c		-	2,50,000
	(Being DRR transferred post redemption)
31-03-2024	Debenture Redemption Reserve A/c   ...Dr.		3,50,000	-
	To General Reserve A/c		-	3,50,000
	(Being DRR transferred post redemption)