Question

X Ltd. redeemed 1,000 6% Debentures of Rs 100 each by converting them into equity shares of Rs 100 each. The 6% Debentures were redeemable at a premium of 5% for which the Equity shares were issued as a premium of 25%. Pass the necessary journal entries for the redemption of the above mentioned debentures in the books of X Ltd.

Answer 1

Books of X Ltd.                                      Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	6% Debentures A/c	Dr.		1,00,000
	Premium on Redemption of Debentures A/c	Dr.		5,000
	To Debentureholders				1,05,000
	(1,000 6% Debentures due for redemption)
	Debentureholders	Dr.		1,05,000
	To Equity Shares Capital A/c				84,000
	To Securities Premium A/c				21,000
	(840 equity shares of Rs 100 each issued at premium of Rs 25 to Debentureholders)