Question

On 31^st March 2018 SS Ltd. had 50,000 10% debentures of ₹ 100 each outstanding. These debentures were due for redemption on 31^st March, 2019. Debenture Redemption Reserve has a balance of ₹ 5,00,000 on 31^st March, 2018. 

Ignoring the entries for interest, pass the necessary journal entries for redemption of debentures.

Answer 1

Books of SS Ltd. Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2018
March 31	Surplus    ...Dr.		7,50,000	-
	To Debenture Redemption Reserve A/c		-	7,50,000
	(Being required amount transferred to DRR account)
April 30	Debenture Redemption Investment A/c    ...Dr.		7,50,000	-
	To Bank A/c		-	7,50,000
	(Being necessary Investment made)
2019
March 31	Bank A/c    ...Dr.		7,50,000	-
	To Debenture Redemption Investment A/c		-	7,50,000
	(Being Investment realised for redemption)
	10% Debenture A/c    ...Dr.		50,00,000	-
	To Debentureholder’s A/c		-	50,00,000
	(Being amount due to debenture holders)
	Debentureholder’s A/c    ...Dr.		50,00,000	-
	To Bank A/c		-	50,00,000
	(Being amount paid to debenture holders)
	Debenture Redemption Reserve A/c    ...Dr.		12,50,000	-
	To General Reserve A/c		-	12,50,000
	(Being balance of DRR transferred to General Reserve)