Question

On 1.4.2013 Kaka Ltd. had Rs 50,00,000, 9% debentures of Rs 100 each outstanding.
(i) On 1-4-2014 the company purchased in the open market 25,000 of its own debentures of Rs 99 each and cancelled the same immediately.
(ii) On 1-4-2015 the company redeemed at par debentures of Rs 10,00,000 by draw of lot.
(iii) On 1-1-2016 the remaining debentures were purchased for Rs 14,99,000 and were cancelled immediately.

Ignoring debenture redemption reserve and interest on debentures pass necessary journal entries for the above transactions in the books of the company.

Answer 1

	Books of Kaka Ltd.
	Journal
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(i)		Own Debentures A/c	Dr.		24,75,000
2014		To Bank A/c				24,75,000
Apr.01		(Purchase of 25,000 own debentures @ Rs 99 each)
		9% Debentures A/c	Dr.		25,00,000
		To Own Debentures A/c				24,75,000
		To Gain (Profit)on Cancellation				25,000
		(Cancellation of own debentures)
		Gain (Profit) on Cancellation A/c	Dr.		25,000
		To Capital Reserve A/c				25,000
		(Transfer of Gain (Profit) on redemption of debentures to Capital Reserve)
(ii)		9% Debentures A/c	Dr.		10,00,000
2015		To Debentureholders’ A/c				10,00,000
Apr.01		(9% Debentures due for redemption)
		Debentureholders’ A/c	Dr.		10,00,000
		To Bank A/c				10,00,000
		(Amount paid to debentureholders)
(iii)		Own Debentures A/c	Dr.		14,99,000
2015		To Bank A/c				14,99,000
Jan.01		(Purchase of 15,000 own debentures)
		9% Debentures A/c	Dr.		15,00,000
		To Own Debentures A/c				14,99,000
		To Gain (Profit)on Cancellation				1,000
		(Own debentures purchased and cancelled)
		Gain (Profit) on Cancellation A/c	Dr.		1,000
		To Capital Reserve A/c				1,000
		(Transfer of Gain (Profit) on redemption of debentures to Capital Reserve)