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Question
On 1st April, 2017, Gabriel Ltd., a listed company, issued 3,000, 8% Debentures of ₹ 100 each. One-third of the Debentures were redeemed at par on 31st March, 2021 and the remaining two-third on 31st March, 2022. The company paid interest on debentures annually on 31st March.
After meeting the requirements of the Companies Act, 2013, regarding Debenture Redemption Investment, the company redeemed the debentures.
You are required to record necessary journal entries in the books of the company only on 31st March, 2022; including entries for interest on debentures.
Solution
| Journal Entries | |||
| Date | Particulars | Dr. (₹) | Cr. (₹) |
| 2022 | |||
| March 31 | Interest on Debentures A/c ...Dr. `(2,000 xx 100 xx 8/100)` |
16,000 | |
| To Debentureholders A/c | 16,000 | ||
| (Interest due on Debentures) | |||
| March 31 | Debentureholders A/c ...Dr. | 16,000 | |
| To Bank A/c | 16,000 | ||
| (Interest on debentures paid) | |||
| March 31 | Bank A/c ...Dr. | 30,000 | |
| To Debenture Redemption Investment A/c | 30,000 | ||
| (Investments encashed) | |||
| March 31 | 8% Debentures A/c ...Dr. | 2,00,000 | |
| To Debentureholders A/c | 2,00,000 | ||
| (Amount payable to debentureholders made due) | |||
| March 31 | Debentureholders A/c ...Dr. | 2,00,000 | |
| To Bank A/c | 2,00,000 | ||
| (Payment made to debentureholders) | |||
| March 31 | Statement of Profit and loss A/c ...Dr. | 16,000 | |
| To Interest on Debentures A/c | 16,000 | ||
| (Interest paid on debentures transferred to Statement of Profit and Loss) |
|||
Note: A listed company is not required to make Debenture Redemption Reserve A/c (DRR). Thus, no entry for DRR will be made.
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