Advertisements
Advertisements
Question
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 .
Advertisements
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
2015 |
|
|
|
|
|
|
Mar.31 |
Surplus i.e., Balance in Statement of Profit & Loss A/c |
Dr. |
|
9,50,000 |
|
|
|
To Debentures Redemption Reserve A/c |
|
|
|
9,50,000 |
|
|
(Amount transferred to DRR) |
|
|
|
|
|
|
|
|
|
|
|
|
Apr.01 |
Debenture Redemption Investment A/c |
Dr. |
|
5,70,000 |
|
|
|
To Bank A/c |
|
|
|
5,70,000 |
|
|
(Amount invested in specified security) |
|
|
|
|
|
|
|
|
|
|
|
|
June.30 |
Bank A/c |
Dr. |
|
5,70,000 |
|
|
|
To Debenture Redemption Investment A/c |
|
|
|
5,70,000 |
|
|
(Debenture Redemption Investment realized) |
|
|
|
|
|
|
|
|
|
|
|
|
June.30 |
9% Debenture A/c |
Dr. |
|
38,00,000 |
|
|
|
Premium on Redemption of Debenture A/c |
Dr. |
|
1,90,000 |
|
|
|
To Debenture holder’s A/c |
|
|
|
39,90,000 |
|
|
(Debenture due for redemption) |
|
|
|
|
|
|
|
|
|
|
|
|
June.30 |
Debenture holder’s A/c |
Dr. |
|
39,90,000 |
|
|
|
To Bank A/c |
|
|
|
39,90,000 |
|
|
(Debentures redeemed) |
|
|
|
|
|
|
|
|
|
|
|
|
June.30 |
Debentures Redemption Reserve A/c Dr. |
|
9,50,000 |
|
|
|
|
To General Reserve A/c |
|
|
9,50,000 |
|
|
|
(Debentures Redemption Reserve transferred to General Reserve) |
|
|
|
|
Working Note:
Amount required to be transferred to DRR
= 25% of Face Value of Debentures
= 25% of Rs 38,00,000 = Rs 9,50,000
Amount required to be transferred to DRI
= 15% of Face Value of Debentures
= 15% of Rs 38,00,000 = Rs 5,70,000
APPEARS IN
RELATED QUESTIONS
State the provisions of the Companies Act, 2013 for the creation of 'Debenture Redemption Reserve'.
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.
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?
IFCI Ltd.(An All India Financial Institution) issued 10,00,000; 9% Debentures of ₹ 50 each on 1st April, 2011 redeemable on 1st April, 2019. How much amount of Debentures Redemption Reserve is required before the redemption of debentures? Also, pass Journal entries for issue and 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.
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.
Rich sugar Ltd. issued ₹ 20 Lakh,8% Debentures divided into debentures of ₹ 100 each on 1st April, 2013, redeemable in four equal annual installments starting from 31st March,2016. The company decided to transfer to Debentures Redemption Reserve ₹ 2,50,000 each year on 31st March,2014 and 2015.
The company invested ₹ 3,00,000 in Government securities as required by the Companies Act, 2013.
Pass necessary journal entries for the above transactions.
Hp Ltd. has 1,00,000;8% Debentures of ₹ 50 each due for redemption in five equal annual installments starting from 30th June, 2015. Debentures Redemption Reserve has a balnce of ₹ 5,00,000 on that date . Pass journal entries.
Venus Ltd. had 9,000, 9% Debentures of ₹ 100 each due for redemption . These debentures are to be redeemed in 3 equal installments (starting from 31st March,2015) at a premium of 10%. The company had a balance of ₹ 25,000 in the Debentures Redemption Reserve .
Pass necessary entries for redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the 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 .
'Ananya Ltd.' had an authorised capital of ₹ 10,00,00,000 divided into 10,00,000 equity shares of ₹ 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March,2007 was ₹ 30 . The management decided to export its products to African countries . To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(a) Issue 47,500 equity shares at a premium of ₹ 100 per share .
(b) Obtain a long-term loan from bank which was available at 12% per annum.
(c) Issue 9% Debentures at a discount of 5%.
After evaluating these alternatives , the company decided to issue 1,00,000,9% Debentures on 1st April,2008. The face value of each debentures was ₹ 100 . These debentures were redeemable in four installments starting from the end of third year, which were as follows:
| Year | III | IV | V | VI |
| Amount (₹) | 10,00,000 | 20,00,000 | 30,00,000 | 40,00,000 |
Prepare 9% Debenture Account form 1st April, 2008 till all the debentures were redeemed.
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:
No debenture redemption reserve is required for debentures issued by ______.
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.
What is the maximum amount of debentures which an unlisted company, other than a NBFC and HFC, can redeem out of its capital?
