Page 222 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Particulars
Dr.
July

To 6% Debentures Account

(Being issue of 1,000 debentures of 100 each)
Dec. 31 Debenture Interest Account
Dr.
3,000
To Bank Account

3,000
(Being payment of debenture interest to debenture-holders)

Dec. 31 Profit and Loss Account
Dr.
3,000

3,000
To Debenture Interest A/c

(Being debenture interest transferred to P & L accounts)
2004
Dr.
May 31 Own Debentures Account
9,800
Debenture Interest Account

250
Dr.

To Bank Account
10,050

Date Bank Account L.F. 1,00,000 1,00,000
(Being 100 debentures purchased as investment @ 98 ex-interest)
June 30 Debenture Interest Account Dr. 2,750
To Bank Account 2,700
To Interest on Own Debentures Account 50
(Being payment of interest on 900 debentures belonging to outsiders)
Dec. 31 Debenture Interest Account Dr. 3,000 Unit 9: Methods of Redemption-II
To Bank Account 2,700
To Interest on Own Debentures A/c 300
(Being payment of interest on debentures belonging to outsiders)
Dec. 31 Profit and Loss Account Dr. 6,000 Notes
To Debenture Interest Account 6,000
(Being transfer of debenture interest)
Interest on Own Debentures A/c Dr. 350
To Profit and Loss Account 350
(Being transfer of interest on own debentures to P & L account)
June 30 Debenture Interest Account Dr. 3,000
To Bank Account 2,700
To Interest on Own Debentures A/c 300
(Being payment of interest on debentures belonging to outsiders)
Sep. 30 Own Debentures Account Dr. 4,725
Debenture Interest Account Dr. 75
To Bank Account 4,850
(Being 50 debentures purchased at 97 cum-interest as
investments)
Dec. 31 Debenture Interest Account Dr. 2,925
To Bank Account 2,550
To Interest on Own Debentures A/c 375
(Being payment of interest on debentures belonging to outsiders)
Dec. 31 6% Debentures Account Dr. 10,000
To Own Debentures Account 9,800
To Profit on Cancellation of Debentures Account. 200
(Being cancelled 100 debentures)
Dec. 31 Profits on Cancellation of Debentures A/c Dr. 200
To Capital Reserve Account 200
(Being transfer of profit on cancellation to capital reserve)
Interest on Own Debentures Account Dr. 675
To Profit and Loss Account 675
(Being interest on own debentures transferred to P & L account)
Profit and Loss Account Dr. 6,000
To Debenture Interest Account 6,000
(Being debenture interest transferred to P & L account)
Debenture Redemption Fund Account Dr. 10,000
To General Reserve Account 10,000
(Being an amount equal to the nominal value of debentures redeemed
transferred from D.R.F. to general reserve)
st
Balance Sheet as on 31 December 2005
Liabilities Assets
Secured Loans:
900; 6% Debenture of 100 each 90,000 Investments:
Own debentures (face value 5000) 4,750
Reserve & Surplus:
Capital reserve 200
Notes If the debentures are redeemable at premium and the company purchases its own
debenture from the open market, it saves that amount equal to the premium which would
have been payable on debentures in the ordinary course of redemption.
LOVELY PROFESSIONAL UNIVERSITY 215