On 1-4-2013 NK Ltd. had 15,000, 9% Debentures of Rs.100 each outstanding.
(i) On 1-4-2014 the company purchased from the open market 5,000 of its own debentures for Rs.102 each and cancelled the same immediately.
(ii) On 1-4-2015 company redeemed at par debentures of Rs.3, 00,000 by draw of lot.
(iii) On 17-2-2016 the remaining debentures were purchased for immediate cancellation for Rs.5, 99,500.
Ignoring debenture redemption reserve and interest on debentures pass necessary journal entries for the above transactions in the books of the company.
Solution
In the books of NK Ltd
Journal
| Date | Particulars | L.F. | Dr.(Rs.) | Cr.(Rs.) |
|
2014 Apr 01
2016 Apr 01
2016 Feb 17
|
Own Debentures A/c Dr To Bank A/c (Being purchase of 5,000 own debentures @ Rs.102 each)
9% Debentures A/c Dr Loss on Issue of Debentures A/c Dr To Own Debentures A/c (Being cancellation of own debentures)
9% Debentures A/c Dr To Debenture holders A/c (Being 9% 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 7,000 own debentures)
9% Debentures A/c Dr To Own Debentures A/c To Gain (Profit) on Cancellation (Being Own debentures purchased and cancelled)
Gain on Cancellation A/c Dr To Capital Reserve A/c (Being transfer of gain on redemption of debentures to Capital Reserve) |
5,10,000
5,00,000 10,000
3,00,000
3,00,000
5,99,500
7,00,000
1,00,500
|
5,10,000
5,10,000
3,00,000
3,00,000
5,99,500
5,99,500 1,00,500
1,00,500
|
