Taneja Constructions Ltd. has an outstanding balance of Rs 5,00,000, 7% debentures of Rs 100 each redeemable at a premium of 10%. According to the terms of redemption, the company redeemed 30% of the above debentures by converting them into shares of Rs 50 each at a premium of 20%. Record the entries for the redemption of debentures in the books of Taneja Constructions Ltd.
Solution
| In the Books of Taneja Constructions Ltd. Journal |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
7% Debenture A/c Dr. Premium on Redemption A/c Dr. To Debenture holders' A/c (Being Debenture due for redemption at a premium of 10%) |
5,00,000 50,000
|
5,50,000
|
||
|
Debenture holders' A/c Dr. To Equity share capital A/c To Securities premium A/c (Being 2,750 shares of Rs 50 each issued at a premium of 20% to debenture holders) |
1,65,000
|
1,37,500 27,500
|
||
Working Note:
Number of shares to be issued = `"Amount due to the Debentureholders"/"Issue Price(=Face-Value -Premium)" = 165000/(60(50 + 10)` = 2,750 share
