Question

Give the necessary journal entries at time of redemption of debentures

"X Ltd. issued 500, 9% debentures of Rs.100 each at par and redeemable at par at the end of 5 years out of capital."

Options

• i) 9% Debentures A/c    Dr. 5,00,000
       To Debenture holders   5,00,000

  ii) Debenture holders    Dr.    5,00,000
       To Bank A/c      5,00,000

• i) 12% Debentures A/c   Dr.     5,00,000
      Premium on Redemption of Debentures A/c Dr.   10,000
      To Debenture holders 5,10,000

  ii) Debenture holders   Dr.    5,10,000 
       To Bank A/c     5,10,000

• Can't be concluded

• None of these

Answer 1

i) 9% Debentures A/c    Dr. 5,00,000
     To Debenture holders   5,00,000

ii) Debenture holders    Dr.    5,00,000
     To Bank A/c      5,00,000