Question

On 1^st April 2015, Mayfair Ltd. issued 4,000 9% debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 8%. The debentures were redeemable on 31^st March 2019. The company created the necessary minimum amount of debenture redemption reserve and purchased the required amount of debenture redemption investments as per the provisions of Companies Act, 2013.
Pass the necessary journal entries for the redemption of debentures.

Answer 1

In the books of Mayfair Ltd.
Journal 

Date	Particulars		L.F.	Debit Amount(₹)	Credit Amount(₹)
2018
March 31	Surplus i.e. Balance as per Statement of Profit & Loss A/c	Dr.		1,00,000
	To Debenture Redemption Reserve A/c				1,00,000
	Being 25% of 4,000 debentures transferred to DRR)
2018 April 30	Debenture Reserve Investment A/c	Dr.		60,000
	To Bank A/c				60,000
	(Being Debenture Redemption Investment made at 15% for 4,000 debentures )
2019 March 31	Bank A/c	Dr.		60,000
	To Debenture Reserve Investment A/c				60,000
	(Being debenture reserve securities matured)
2019 March 31	9% Debenture A/c	Dr.		4,00,000
	Premium on Redemption A/c	Dr.		32,000
	To Debenture holder’s A/c				4,32,000
	(For amount due on debenture holders)
2019 March 31	Debenture holders A/c	Dr.		4,32,000
	To Bank A/c				4,32,000
	(For debentures paid)
2019 March 31	Debenture Redemption Reserve A/c	Dr.		1,00,000
	To General Reserve A/c				1,00,000
	(For DRR transferred to General reserve)