On 1.4.2013 JJJ Ltd had Rs.1,00,00,000, 10% Debentures of Rs.100 each outstanding.
(i) On 1.4.2014 the company purchased in the open market 30,000 of its own debentures for Rs.99 each and cancelled the same immediately.
(ii) On 28.2.2015 the company redeemed at par debentures of Rs.50, 00,000 by draw of a lot.
(iii) On 31.1.2016 the remaining debentures were purchased for immediate cancellation for Rs.19,99,000.
Ignoring interest on debentures and debenture redemption reserve, pass necessary journal entries for the above transactions in the books of the company.
Solution
In the books of JJJ Ltd
Journal
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|
2014 Apr. 01
2015 Feb. 28
2016 Jan. 31
|
Own Debentures A/c Dr To Bank A/c (Being purchase of 30,000 own debentures @ Rs.99 each)
10% Debentures A/c Dr To Own Debentures A/c To Gain (Profit) on cancellation (Being cancellation of own debentures)
Gain (Profit) on Cancellation A/c Dr To Capital Reserve A/c (Being transfer of gain (Profit) on redemption of debentures to capital reserve)
10% Debentures A/c Dr To Debenture holders A/c (Being 10% Debenture due for redemption)
Debenture holders A/c Dr To Bank A/c (Being amount paid to debenture holders)
Own Debentures A/c Dr To Bank A/c (Being purchase of 20,000 own debentures)
10% Debentures A/c Dr To Own Debentures A/c To Gain (Profit) on Cancellation (Being own debentures purchased and cancelled)
Gain (Profit) on Cancellation A/c Dr To Capital Reserve A/c (Being transfer of Gain (Profit) on redemption of debentures to Capital Reserve) |
29,70,000
30,00,000
30,000
50,00,000
50,00,000
19,99,000
20,00,000
1,000
|
29,70,000
29,70,000 30,000
30,000
50,00,000
50,00,000
19,99,000
19,99,000 1,000
1,000
|
