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.
Solution
In the books of Roshni Ltd Journal
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
2014
2015
2016
|
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
|
