On 1.4.2013 JMR Ltd. had 20,000, 9% debentures of Rs 100 each outstanding
(i) On 1.4.2014 the company purchased in the open market 6,000 of its own debentures for Rs 98 each and cancelled the same immediately.
(ii) On 28.2.2015 the company redeemed at par debentures of Rs 10, 00,000 by draw of a lot.
(iii) On 1.3.2016 the remaining debentures were purchased for immediate cancellation for Rs 3, 99,000.
Ignoring interest on debentures and debenture redemption reserve, pass necessary journal entries for the above transactions in the books of JMR Ltd.
Solution
the books of JMR Ltd Journal
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
| 2014 Apr 01 |
Own Debentures A/c Dr To Bank A/c (Being purchase of 6,000 own debentures @ Rs 98 each)
9% 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) |
5,88,000
6,00,000
12,000
|
5,88,000
5,88,000 12,000
12,000
|
|
| 2015 Feb.28 |
9% Debentures A/c Dr To Debentureholders A/c (Being 9% Debenture due for redemption) Debenturesholders A/c Dr To Bank A/c (Being amount paid to debenture holders) |
10,00,000
10,00,000
|
10,00,000
10,00,000
|
|
| 2016 Mar.01 |
Own Debentures A/c Dr To Bank A/c (Being purchase of 4,000 own debentures) 9% Debentures A/c Dr To Own Debentures A/c To Gain (Profit) on Cancellation (Being own debentures purchased and cancelled) Gain (Profit) on Cancellation A/c Dr To Capital Reserve A/c (Being transfer of gain (profit) on redemption of debentures to Capital Reserve) |
3,99,00
4,00,000
1,000
|
3,99,000
3,99,000 1,000
1,000
|
