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Solution - On 1-4-2013 Nk Ltd. Had 20,000, 11% Debentures of Rs 100 Each Outstanding. - CBSE (Arts) Class 12 - Accountancy

Question

On 1-4-2013 NK Ltd. had 20,000, 11% Debentures of Rs 100 each outstanding.

(i) On 1-4-2014 the company purchased in the open market 4,000 of its own debentures at Rs 102 each and cancelled the same immediately.

(ii) On 1-4.2015 the company redeemed at par debentures of Rs 8, 00,000 by draw of a lot.

(iii) On 28-2-2016 the remaining debentures were purchased for immediate cancellation for Rs 7, 89,900.

Pass necessary journal entries for the above transactions in the books of the company ignoring debenture redemption reserve and interest on debentures.

Solution

                                                                 In the books of NK Ltd
                                                                              Journal

Date Particulars L.F.

Dr.

Rs

Cr.

Rs

2014
Apr 01

 

 

 

 

 

 

 

 

 

 

2015
Apr.01

 

 

 

 

 

 

2016
Feb.28

 

 

 

 

 

 

 

 

 

Own Debentures A/c                                                 Dr

                  To Bank A/c

(Being purchase of 4,000 own debentures @ Rs 102 each)

10% Debentures A/c                                               Dr

Loss on Cancellation of own Debentures                Dr

                  To own Debentures A/c

(Being cancellation of own debentures)

Statement of P&L Capital Profits A/c                      Dr

-------- To Loss on Cancellation of own Debenture A/c

(Being loss on cancellation of own debentures to be
written off from capital profits or statement of profit and
loss)

 

9% Debentures A/c                                               Dr

                To Debenture holders 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 2,000 own debentures)

10% 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)

 

4,08,000

 

 

4,00,000

8,000

 

 

8,000

 

 

 

 

8,00,000

 

 

8,00,000

 

 

 

7,89,900

 

 

8,00,000

 

 

 

10,100

 

 

 

4,08,000

 

 

 

4,08,000

 

 

8,000

 

 

 

 

8,00,000

 

 

8,00,000

 

 

 

7,89,900

 

 

7,89,900

10,100

 

 

10,100

 

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Solution for question: On 1-4-2013 Nk Ltd. Had 20,000, 11% Debentures of Rs 100 Each Outstanding. concept: Redemption of Debentures for Immediate Cancellation - Draw of Lots, Lump Sum and Purchase in the Open Market. For the courses CBSE (Arts), CBSE (Commerce)
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