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On 1.4.2013 Roshni Ltd. Had Rs 50,00,000, 9% Debentures of Rs 100 Each Outstanding. - Accountancy

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On 1.4.2013 Roshni 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 20,000 of its own debentures at Rs 98.50 each and cancelled the same immediately.

(ii) On 1.10.2014 the company redeemed at par debentures of Rs  16,00,000 by draw of a lot.

(iii) On 31.3.2015 the remaining debentures were purchased for immediate cancellation for Rs 9,98,000. Ignoring interest on debentures and debenture redemption reserve.

Pass necessary journal entries for the above transactions in the books of Roshni Ltd.

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Solution

                                                                                     In the books of Roshni Ltd Journal

 

Date Particulars L.F.

Dr.

Rs

Cr.

Rs

2014
Apr 01

 

 

 

 

 

 

 

 

 

 

2015
Oct.01

 

 

 

 

 

 

2016
Mar.31

 

 

 

 

 

 

 

 

 

Own Debentures A/c                                                                         Dr

                           To Bank A/c

(Being purchase of 20,000 own debentures @ `98.50 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 on redemption of debentures to Capital Reserve)

 

9% Debentures A/c                                                                       Dr

                             To Debentureholders 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 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)

 

19,70,000

 

 

20,00,000

 

 

 

30,000

 

 

 

16,00,000

 

 

16,00,000

 

 

 

9,98,000

 

 

14,00,000

 

 

 

4,02,000

 

 

 

19,70,000

 

 

19,70,000

30,000

 

 

30,000

 

 

 

16,00,000

 

 

16,00,000

 

 

 

9,98,000

 

 

9,98,000

4,02,000

 

 

4,02,000

 

 

Concept: Redemption of Debentures for Immediate Cancellation - Draw of Lots, Lump Sum and Purchase in the Open Market
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