Page 200 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 8: Methods of Redemption–I

Solution: Notes
Debenture Redemption Fund Account
Date Particulars Date Particulars
Dec. 31 To Balance c/d 65,000 Dec. 31 By Profit and Loss Appropriation A/c 65,000
65,000 65,000
2004 2004
Dec. 31 To Balance c/d 1,30,000 Jan.1 By Balance b/d 65,000
Dec. 31 By Profit and Loss Appropriation A/c 65,000
1,30,000 1,30,000
2005 2005
Dec. 31 To Bank Account 2,10,000 Jan. 1 By Balance b/d 1,30,000
Dec. 31 By Profit and Loss Appropriation A/c 65,000
Dec. 31 By Debenture Redemption Fund
Policy Account 15,000
2,10,000 2,10,000
Debenture Redemption Fund Policy Account

Date Particulars Date Particulars
Jan.1 To Bank Account 65,000 Dec. 31 By Balance c/d 65,000
65,000 65,000
2004 2004
Jan.1 To Balance b/d 65,000 Dec. 31 By Balance c/d 1,30,000
Jan. 1 To Bank account 65,000
1,30,000
1,30,000
2005 2005
Jan. 1 To Balance b/d 1,30,000 Dec. 31 By Bank Account 2,10,000
Jan. 1 To Bank Account 65,000
Dec. 31 By Debenture R. Fund A/c 15,000
2,10,000 2,10,000
12% Debentures Account
Date Particulars Date Particulars
Jan. 1 To Balance c/d 2,10,000 Jan. 1 To Bank Account 2,10,000
2,10,000 2,10,000
2004 2004
Dec. 31 To Balance c/d 210,000 Jan. 1 By Balance b/d 2,10,000
2,10,000 2,10,000
2005 2005
Dec. 31 To Bank Account 2,10,000 Jan.1 By Balance b/d 2,10,000
2,10,000 2,10,000
Illustration 11 (Redemption by Insurance Policy with Interest)
Manish Mills Limited issued on 1st January, 2003 15,00,000, 12% Debentures which are to be
redeemed at the end of three years. For the redemption of 12% Debentures the company took an
insurance policy on which annual premium of 4,71,160.72 is paid. The rate of interest may be
estimated 3% per annum. Show Debenture Redemption Fund Account and Debenture
Redemption Policy Account for 3 years in the books of the company.

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