Page 217 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Solution:
(a) Journal
Date Particulars L.F. ` `
May 1 Own Debentures Account Dr. 98,000
Debenture Interest Account Dr. 5,000
To Bank Account 1,03,000
(Being own debentures purchased at ` 98 each ex-interest)
June 30 Debenture Interest Account Dr. 1,45,000
To Bank Account 1,42,500
To Interest on Own Debenture Account 2,500
(Being 6 months interest on 19,000 debenture paid and 2 months
interest on 1,000 own debentures due)
Dec. 1 15% Debentures Account Dr. 1,00,000
To Own Debentures Account 98,000
To Profit on Cancellation of Own Debenture Account 2,000
(Being cancellation of 1,000 own debentures)
Dec. 1 Profit on Cancellation of Own Debenture Account Dr. 2,000
To Capital Reserve Account 2,000
(Being transfer of profit on cancellation of own debentures to capital
reserve account)
Dec. 1 Debenture Interest Account Dr. 6,250
To Interest on Own Debenture Account 6,250
st
th
[Being interest due for 5 months (from 30 June to 1 Dec. on own
debentures)]
Dec. 31 Debenture Interest Account Dr. 1,42,500
To Bank Account 1,42,500
(Being payment made for 6 months’ interest on 19,000 debentures)
Dec. 31 Interest on Own Debentures Account Dr. 8,750
To Profit and Loss Account 8,750
(Being interest on own debentures i.e., ` 6,250 + 2,500 transferred
to profit and loss account)
Dec. 31 Profit and Loss Account Dr. 2,85,000
To Debentures Interest Account 2,85,000
(Being transfer of debenture interest to profit and loss account)
(b) Journal
Date Particulars L.F. ` `
Dec. 1 Bank Account Dr. 1,08,000
To Own Debentures Account 1,01,750
To Interest on Own Debentures Account 6,250
(Being sale of 1,000 debentures cum-interest at ` 108).
Dec. 1 Own Debentures Account Dr. 3,750
To Profit on Resale of Own Debentures Account 3,750
Profit on resale (1,01,750-98,000) of own debentures transferred
to profit on resale of own debentures account
Dec. 1 Interest on Own Debentures Account Dr. 6,250
Profit on Resale of Own Debentures Account Dr. 3,750
To Profit and Loss Account 10,000
(Being transfer of interest on own debentures and profit on resale of
own debentures to profit and loss account)

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