On 1.4.2013 Kaka Ltd. Had Rs 50,00,000, 9% Debentures of Rs 100 Each Outstanding. (I) on 1-4-2014 the Company Purchased in the Open Market 25,000 of Its Own Debentures of Rs 99 Each and Cancell - Accountancy

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On 1.4.2013 Kaka Ltd. had Rs 50,00,000, 9% debentures of Rs 100 each outstanding.
(i) On 1-4-2014 the company purchased in the open market 25,000 of its own debentures of Rs 99 each and cancelled the same immediately.
(ii) On 1-4-2015 the company redeemed at par debentures of Rs 10,00,000 by draw of lot.
(iii) On 1-1-2016 the remaining debentures were purchased for Rs 14,99,000 and were cancelled immediately.

Ignoring debenture redemption reserve and interest on debentures pass necessary journal entries for the above transactions in the books of the company.

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Solution

 

                          Books of Kaka Ltd.

 

                                      Journal

Date

                                          Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

(i)

Own Debentures A/c

Dr.

 

24,75,000

 

2014

            To Bank A/c

 

 

 

24,75,000

Apr.01

(Purchase of 25,000 own debentures @ Rs 99 each)

 

 

 

 

 

 

 

 

 

 

 

9% Debentures A/c

Dr.

 

25,00,000

 

 

            To Own Debentures A/c

 

 

 

24,75,000

 

            To Gain (Profit)on Cancellation

 

 

 

25,000

 

(Cancellation of own debentures)

 

 

 

 

 

 

 

 

 

 

 

Gain (Profit) on Cancellation A/c

Dr.

 

25,000

 

 

          To Capital Reserve A/c

 

 

 

25,000

 

(Transfer of Gain (Profit) on redemption of debentures to Capital Reserve)

 

 

 

 

 

 

 

 

 

 

(ii)

9% Debentures A/c

Dr.

 

10,00,000

 

2015

            To Debentureholders’ A/c

 

 

 

10,00,000

Apr.01

(9% Debentures due for redemption)

 

 

 

 

 

 

 

 

 

 

 

Debentureholders’ A/c

Dr.

 

10,00,000

 

 

            To Bank A/c

 

 

 

10,00,000

 

(Amount paid to debentureholders)

 

 

 

 

 

 

 

 

 

 

(iii)

Own Debentures A/c

Dr.

 

14,99,000

 

2015

            To Bank A/c

 

 

 

14,99,000

Jan.01

(Purchase of 15,000 own debentures)

 

 

 

 

 

 

 

 

 

 

 

9% Debentures A/c

Dr.

 

15,00,000

 

 

            To Own Debentures A/c

 

 

 

14,99,000

 

            To Gain (Profit)on Cancellation

 

 

 

1,000

 

(Own debentures purchased and cancelled)

 

 

 

 

 

 

 

 

 

 

 

Gain (Profit) on Cancellation A/c

Dr.

 

1,000

 

 

            To Capital Reserve A/c

 

 

 

1,000

 

(Transfer of Gain (Profit) on redemption of debentures to Capital Reserve)

 

 

 

 

 

 

 

 

 
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2015-2016 (March) Foreign Set 3

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