Page 187 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Solution:
Raj Shree Industries Limited
Journal
(a) When redemption is in lump-sum

Date Particulars L.F.
2003
Jan. 1 Bank Account Dr. 6,30,000
Loss on Issue of Debentures Account Dr. 1,05,000
To 12% Debentures Account 7,00,000
To Premium on Redemption of Debentures Account 35,000
(Being issue of debentures at discount and redeemable at premium)
2005
Dec. 31 12% Debentures Account Dr. 7,00,000
Premium on Redemption of Debentures Account Dr. 35,000
To Debenture-holders Account 7,35,000
(Being amount due to debenture-holders on redemption)
Profit and Loss Account Dr. 7,00,000
To Debenture Redemption Reserve A/c 7,00,000
(Being profit transferred from P. & L. account to DRR)
Debenture-holders Account Dr. 7,35,000
To Bank Account 7,35,000
(Being amount paid to debenture-holder)
Debenture Redemption Reserve Account Dr. 7,00,000
To General Reserve Account 7,00,000
(Being balance of DRR transferred to general reserve)
(b) When redemption is in three annual instalments of 1000, 2,000 and 2,000 debentures.

Date Particulars L.F.
2003
Jan. 1 Bank Account Dr. 6,30,000
Loss on Issue of Debentures Account Dr. 1,05,000
To 12% Debentures Account 7,00,000
To Premium on Redemption of Debentures Account 35,000
(Being issue of debentures at discount and redeemable at premium)
Dec. 31 12% Debentures Account Dr. 1,00,000
Premium on Redemption of Debentures Account Dr. 5,000
To Debenture-holders Account 1,05,000
(Being amount payable to debenture-holders on redemption)
Profit and Loss Account Dr. 1,00,000
To Debenture Redemption Reserve Account 1,00,000
(Being transfer of profits to debenture redemption reserve)
Debenture-holders Account Dr. 1,05,000
To Bank Account 1,05,000
(Being payment made to debenture-holders)
2004
Dec. 31 12% Debentures Account Dr. 2,00,000
Premium on Redemption of Debentures Account Dr. 10,000
To Debenture-holders Account 2,10,000
(Being amount due to debenture-holders on redemption)
Profit and Loss Account Dr. 2,00,000
To Debenture Redemption Reserve Account 2,00,000
(Being transfer of profits to debenture redemption reserve)
Debenture-holders Account Dr. 2,10,000
To Bank Account
180 LOVELY PROFESSIONAL UNIVERSITY 2,10,000
(Being payment made to debenture-holders)
2005
Dec. 31 12% Debentures Account Dr. 2,00,000
Premium on Redemptions of Debentures Account Dr. 10,000
To Debenture-holders Account 2,10,000
(Being amount due to debenture-holder on redemption)
Profit & Loss Account Dr. 2,00,000
To Debenture Redemption Reserve Account 2,00,000
(Being transfer of profit to debenture redemption reserve)
Debenture-holders Account Dr. 2,10,000
To Bank Account 2,10,000
(Being payment made to debenture-holders)
Debenture Redemption Reserve Account Dr. 7,00,000
To General Reserve Account 7,00,000
(Being the balance of DRR transferred to general reserve)