Question

Phantom Ltd. (a listed NBFC) redeemed its 6,000, 10% Debentures of ₹ 100 each in instalments, as follows:

Date of Redemption	Debentures to be Redeemed
31st March, 2019	3,000
31st March, 2020	1,500
31st March, 2021	1,500

On the basis of the above details, you are required to pass journal entries to record the purchase/sale of Debenture Redemption Investment, from the year of the redemption of the first instalment of debentures to the date of the redemption of the final instalment.

Answer 1

Journal entries of Phantom Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
30-04-2018	Debenture Redemption Investment A/c   ...Dr.		45,000	-
	To Bank A/c		-	45,000
	(Being DRI purchased before 1st redemption, 15% of ₹ 3,00,000)
31-03-2019	Bank A/c   ...Dr.		22,500	-
	To Debenture Redemption Investment A/c		-	22,500
	(Being part of Debenture Redemption Investment sold for redemption)
31-03-2021	Bank A/c   ...Dr.		22,500	-
	To Debenture Redemption Investment A/c		-	22,500
	(Being remaining Debenture Redemption Investment sold on final redemption)

Working Note:

1. Total Debentures = 6,000 × ₹ 100 = ₹ 6,00,000
2. Redemption Schedule:
   

   Date	No. of Debentures Redeemed	Amount (₹)
   31-03-2019	3,000	3,00,000
   31-03-2020	1,500	1,50,000
   31-03-2021	1,500	1,50,000

3. DRI Requirement (Listed NBFC):
   • NBFCs are exempt from creating DRI except before the first redemption in instalments.
   • So, only first redemption (₹ 3,00,000) needs DRI of 15%.
     DRI required on 30-04-2018 = 15% × ₹ 3,00,000 = ₹ 45,000.