Question

X Ltd. had Rs 10,00,00 9% debentures due to be redeemed out of profits on 1^st 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.

 

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Profit and Loss Appropriation A/c	Dr.		5,86,000
	To Debentures Redemption Reserve A/c				5,86,000
	(Amount transferred to DRR (10,00,000 - 4,14,000)
	9% Debentures A/c	Dr.		10,00,000
	Premium on Redemption of Debentures A/c	Dr.		50,000
	To Debentureholders’ A/c				10,50,000
	(Debentures due for redemption to debenturesholders on redemption)
	Debenturesholders’ A/c	Dr.		10,50,000
	To Bank A/c				10,50,000
	(Amount paid to debenturesholders)
	Debentures Redemption Reserve A/c	Dr.		10,00,000
	To General Reserve				10,00,000
	(Debenture Redemption Reserve transferred to General Reserve)