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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. - Accountancy

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.

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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

Concept: Issue of Debentures with Terms of Redemption
  Is there an error in this question or solution?
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