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T.S. Grewal solutions for Class 12 Accountancy chapter 3 - Redemption of Debentures

Chapter 3: Redemption of Debentures

Exercise

Chapter 3: Redemption of Debentures Exercise Exercise solutions [Pages 29 - 32]

Exercise | Q 1 | Page 29

Star Ltd. is a  manufacturer of chemical fertilisers. Its annual turnover is ₹ 50 crores. The company had issued 5,000, 12% Debentures of ₹ 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.

Exercise | Q 2 | Page 29

Young India Ltd. had issued  following debentures:
(a) 1,00,000, 10% fully convertible debentures of ₹ 100 each on 1st April, 2016 redeemable by conversion after 5 years.
(b) 20,000, 10% Debentures of ₹ 100 each redeemable after 4 years , 25% Debentures in Cash and 75% by conversion.
State the amount of DRR required to be created as per the Companies Act,2013.

Exercise | Q 3 | Page 29

Dow Ltd. issued ₹ 2,00,000; 8% Debentures of ₹ 10 each at a premium of 8% on 30th June, 2016 redeemable on 31st March, 2018. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures?

Exercise | Q 4 | Page 29

Nirbhai Chemicals Ltd. issued ₹ 10,00,000; 6% Debentures of ₹ 50 each at a premium of 8% on 30th June, 2018 redeemable on 30th June, 2019. The issue was fully subscribed. Pass Journal entries for issue and redemption of debentures. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures? Also, state how much amount should be invested in specified securities?

Exercise | Q 5 | Page 29

Export-Import Bank of India (EXIM Bank) issued 20,000, 10% Debentures of ₹ 100 each through public issue and 10,000, 10% Debentures of ₹ 100 each through private placement . State the amount of investment to be made by EXIM Bank before redemption of debentures.

Exercise | Q 6 | Page 29

SRCC Ltd. has issued on 1st April, 2017, 20,000, 12% Debentures of ₹ 100 each redeemable by draw of lots as under:
During the year ended on 31st March, 2018        :    15%
During the year ended on 31st March, 2019        :    25%
During the year ended on 31st March, 2020        :    15%
During the year ended on 31st March, 2021        :    25%
During the year ended on 31st March, 2022        :    20%

How much minimum investment should be made by SRCC Ltd. as per Companies Act, 2013 before redemption of debentures? When should it be made?

Exercise | Q 7 | Page 30

IFCI Ltd.(An All India Financial Institution) issued 10,00,000; 9% Debentures of ₹ 50 each on 1st April, 2011 redeemable on 1st April, 2019.  How much amount of Debentures Redemption Reserve is required before the redemption of debentures? Also, pass Journal entries for issue and redemption of debentures.

Exercise | Q 8 | Page 30

On 31st March, 2003, G Ltd. had ₹ 8,00,000;9% Debentures due for redemption. The company had a balance of ₹ 1,40,000 in its Debentures Redemption Reserve . Pass necessary journal entries for redemption of debentures.

Exercise | Q 9 | Page 30
 On 31st March, 2018, W Ltd. had the following balances in its books: ₹ 9% Debentures 6,00,000 Debentures Redemption Reserve 50,000 Surplus,i.e., Balance in Statement of Profit and Loss 3,00,000

On that date, the company decided to transfer ₹ 1,00,000 to Debentures Redemption Reserve. It also decided to redeem  debentures of ₹ 3,00,000 on 30th June, 2018.

Pass necessary Journal entries in the books of the company.

Exercise | Q 10 | Page 30

Mansi Ltd. had 6,000; 10% Debentures of ₹ 100 each due for redemption on 31st March, 2019. Assuming that the debentures were redeemed out of profits, pass necessary Journal entries for the redemption of debentures. There was a credit balance of ₹ 6,00,000 in Surplus, i.e., Balance in Statement of Profit and Loss.

Exercise | Q 11 | Page 30

India Textiles Corporation Ltd. has outstanding ₹ 50,00,000; 9% Debentures of ₹ 100 each due for redemption on 31st July, 2019. Pass Journal entries for redemption assuming that there is a balance of ₹ 3,00,000 in Debentures Redemption Reserve  on the date of redemption.

Exercise | Q 12 | Page 30

Manish  Ltd. issued ₹ 40,00,000; 8% Debentures of ₹ 100 each on 1st April, 2017. The terms of issue stated that the debentures are to be redeemed at a premium of 5% on 30th June, 2019. The company decided to transfer ₹ 10,00,000 out of profits to Debentures Redemption Reserve on 31st March, 2018 and ₹ 10,00,000 on 31st March, 2019.
Pass Journal entries regarding the issue and redemption of debentures, DRR and Investment without providing for the interest or loss on issue of debentures.

Exercise | Q 13 | Page 30

Godrej Ltd. has 20,000; 7% Debentures of ₹ 100 each due for redemption on 31st August, 2018. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March, 2016. Investment, as required by the Companies Act, 2013 is made on 1st April, 2017 in fixed deposit bearing interest @ 6% p.a. Bank deducted TDS @ 10% on its maturity which is 31st March, 2018.
Pass Journal entries for redemption of debentures.

Exercise | Q 14 | Page 30

Apollo Ltd.issued 21,000; 8% Debentures of ₹ 100 each on 1st April, 2013 redeemable at a premium of 8% on 30th June, 2019. The company decided to transfer the required amount to Debentures Redemption Reserve in three equal annual instalments starting with 31st March, 2017. Required investment was made in Government Securities on 30th April, 2019. Ignore interest on debentures and also investment.
Pass necessary Journal entries regarding issue, transfer to DRR, investment, and redemption of debentures.

Exercise | Q 15 | Page 30

On 1st April, 2016, following were the balances of Blue Bird Ltd.:

 10% Debentures (redeemable on 30th September, 2017) ₹ 15,00,000 Debentures Redemption Reserve ₹   2,00,000

The company met the requirements of the Companies Act, 2013 regarding Debentures Redemption Reserve and Investment and redeemed the debentures.

Pass necessary Journal entries for the above transactions in the books of the company.

Exercise | Q 16 | Page 31

Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013. The debentures were redeemable at a premium of 5% on 30th June, 2015. The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015. Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.
Ignoring interest on fixed deposit ,pass necessary journal entries starting from  31st March, 2015 regarding redemption of debentures  .

Exercise | Q 17 | Page 31

On 1st April, 2013 the following balances appeared in the books of Blue and Green Ltd.:
12%Debentures (Redeemable on 31st August, 2015)
₹ 20,00,000
Debentures Redemption Reserve ₹ 2,00,000.
The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures.
Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of company.

Exercise | Q 18 | Page 31

Rich sugar Ltd. issued ₹ 20 Lakh,8% Debentures divided into debentures of ₹ 100 each on 1st April, 2013, redeemable in four equal annual installments starting from 31st March,2016. The company decided to transfer to Debentures Redemption Reserve  ₹ 2,50,000 each year on 31st March,2014 and 2015.
The company invested ₹ 3,00,000 in Government securities as required by the Companies Act, 2013.
Pass necessary journal entries for the above transactions.

Exercise | Q 19 | Page 31

Hp Ltd. has 1,00,000;8% Debentures of ₹ 50 each due for redemption in five equal annual installments  starting from 30th June, 2015. Debentures Redemption Reserve has  a balnce of ₹ 5,00,000 on that date . Pass journal entries.

Exercise | Q 20 | Page 31

Venus Ltd. had 9,000, 9% Debentures of ₹ 100 each due for redemption . These debentures are to be redeemed in 3 equal installments (starting from 31st March,2015) at a premium of 10%. The company had a balance of ₹ 25,000 in the Debentures Redemption Reserve .
Pass necessary entries for redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the debentures.

Exercise | Q 21 | Page 31

Tata Motors Ltd. issued 40,000;7% Debentures of ₹ 100 each on 1st July,2009 redeemable at premium of 5% as under:
On 31st March,2015                         16,000 Debentures
On 31st March,2016                         16,000 Debentures
On 31st March,2017                            8,000 Debentures
It was decided to transfer amount out of profit  to Debentures Redemption Reserve  ₹ 2,00,000 on 31st March, 2012; ₹ 4,00,000 on 31st March , 2013 and balance on 31st March, 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realise them after last redemption . Paas journal entries ignoring interest .

Exercise | Q 22 | Page 32

'Ananya Ltd.' had an authorised capital of ₹ 10,00,00,000 divided into 10,00,000 equity shares of ₹ 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March,2007 was ₹ 30 . The management decided to export its products to African countries . To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(a) Issue 47,500 equity shares at a premium of ₹ 100 per share .
(b) Obtain a long-term loan from bank which was available at 12% per annum.
(c) Issue 9% Debentures at a discount of 5%.
After evaluating these alternatives , the company decided to issue 1,00,000,9% Debentures on 1st April,2008. The face value of each debentures  was ₹ 100 . These debentures were redeemable in four installments starting from the end of third year, which were as follows:

 Year III IV V VI Amount (₹) 10,00,000 20,00,000 30,00,000 40,00,000

Prepare 9% Debenture Account form 1st April, 2008 till all the debentures were redeemed.

Exercise

T.S. Grewal solutions for Class 12 Accountancy chapter 3 - Redemption of Debentures

T.S. Grewal solutions for Class 12 Accountancy chapter 3 (Redemption of Debentures) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE T S Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2 solutions in a manner that help students grasp basic concepts better and faster.

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Concepts covered in Class 12 Accountancy chapter 3 Redemption of Debentures are Meaning of Debentures, Distinction Between Shares and Debentures, Types of Debentures, Issue of Debentures, Over Subscription of Shares, Issue of Debentures for Consideration Other than Cash, Debentures as Collateral Security-concept, Issue of Debentures with Terms of Redemption, Interest on Debentures, Writing off Discount/Loss on Issue of Debentures, Redemption of Debentures, Accounting for Share Capital, Nature and Types of Share and Share Capital, Share Capital - Issue and Allotment of Equity Shares, Employee Stock Option Plan (ESOP), Private Placement of Shares, Public Subscription of Shares, Over Subscription of Shares, Under Subscription of Shares, Issue at Par and Premium and at Discount, Calls in Advance and Arrears, Issue of Shares for Consideration Other than Cash, Accounting Treatment of Forfeiture and Re-issue of Share, Disclosure of Share Capital in Company’S Balance Sheet (Horizontal Form), Concept of Private Placement, Meaning and Concept of Debentures, Issue of Debentures at Par at Premium and at Discount, Issue of Debentures for Consideration Other than Cash, Issue of Debentures with Terms of Redemption, Debentures as Collateral Security-concept, Interest on Debentures, Redemption of Debentures for Immediate Cancellation - Draw of Lots, Lump Sum and Purchase in the Open Market, Creation of Debenture Redemption Reserve, Accounting for Debentures - Conversion Method, Meaning of Redemption of Debentures, Accounting for Companies - Introduction, Theory on Shares, Types of Shares - Preference Shares Equity Shares, Pro-rata Allotment.

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