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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. - Accountancy

Short Note

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? 

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Solution

Section 71 (4) of the Companies Act, 2013 requires that an amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account. Accordingly, Rs 50,000 is required to be transferred to DRR (i.e. 25% of 2,00,000) before the actual date of redemption of debentures.

Concept: Creation of Debenture Redemption Reserve
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 3 Redemption of Debentures
Exercise | Q 3 | Page 29
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