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Question
Venus Ltd. had 9,000, 9% Debentures of ₹ 100 each due for redemption . These debentures are to be redeemed in 3 equal installments (starting from 31st March,2015) at a premium of 10%. The company had a balance of ₹ 25,000 in the Debentures Redemption Reserve .
Pass necessary entries for redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the debentures.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
2014 |
|
|
|
||
|
Mar. 31 |
Statement of Profit and Loss |
Dr. |
2,00,000 |
|
|
|
|
To Debenture Redemption Reserve A/c |
|
|
2,00,000 |
|
|
|
(Transfer of balance amount to DRR) |
|
|
|
|
|
|
|
|
|
||
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
45,000 |
|
|
|
|
To Bank A/c |
|
|
45,000 |
|
|
|
(15% amount invested in securities) |
|
|
|
|
|
2015 |
|
|
|
||
|
Mar. 31 |
9% Debentures A/c |
Dr. |
3,00,000 |
|
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
30,000 |
|
|
|
|
To Debentureholders’ |
|
|
3,30,000 |
|
|
|
(3,000, 9% Debentures due for payment at 10% premium) |
|
|
|
|
|
|
|
|
|
||
|
|
Bank A/c |
Dr. |
45,000 |
|
|
|
|
To Debenture Redemption Investment A/c |
|
|
45,000 |
|
|
|
(DRI encashed) |
|
|
|
|
|
|
|
|
|
||
|
|
Debentureholders’ A/c |
Dr. |
3,30,000 |
|
|
|
|
To Bank A/c |
|
|
3,30,000 |
|
|
|
(Payment to debentureholders’) |
|
|
|
|
|
|
|
|
|
||
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
45,000 |
|
|
|
|
To Bank A/c |
|
|
45,000 |
|
|
|
(15% amount invested in securities) |
|
|
|
|
|
2016 |
|
|
|
||
|
Mar. 31 |
9% Debentures A/c |
Dr. |
3,00,000 |
|
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
30,000 |
|
|
|
|
To Debentureholders’ |
|
|
3,30,000 |
|
|
|
(3,000, 9% Debentures due for payment at 10% premium) |
|
|
|
|
|
|
|
|
|
||
|
|
Bank A/c |
Dr. |
45,000 |
|
|
|
|
To Debenture Redemption Investment A/c |
|
|
45,000 |
|
|
|
(DRI encashed) |
|
|
|
|
|
|
|
|
|
||
|
|
Debentureholders’ A/c |
Dr. |
3,30,000 |
|
|
|
|
To Bank A/c |
|
|
3,30,000 |
|
|
|
(Payment to debentureholders’) |
|
|
|
|
|
|
|
|
|
||
|
Apr. 30 |
Debenture Redemption Investment A/c |
Dr. |
45,000 |
|
|
|
|
To Bank A/c |
|
|
45,000 |
|
|
|
(15% amount invested insecurities) |
|
|
|
|
|
2017 |
|
|
|
||
|
Mar. 31 |
9% Debentures A/c |
Dr. |
3,00,000 |
|
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
30,000 |
|
|
|
|
To Debentureholders’ |
|
|
3,30,000 |
|
|
|
(3,000, 9% Debentures due for payment at 10% premium) |
|
|
|
|
|
|
|
|
|
||
|
|
Bank A/c |
Dr. |
45,000 |
|
|
|
|
To Debenture Redemption Investment A/c |
|
|
45,000 |
|
|
|
(DRI encashed) |
|
|
|
|
|
|
|
|
|
||
|
|
Debentureholders’ A/c |
Dr. |
3,30,000 |
|
|
|
|
To Bank A/c |
|
|
3,30,000 |
|
|
|
(Payment to debentureholders’) |
|
|
|
|
|
|
|
|
|
||
|
|
Debenture Redemption Reserve A/c |
Dr. |
2,25,000 |
|
|
|
|
To General Reserve A/c |
|
|
2,25,000 |
|
|
|
(DRR closed by transferring to General Reserve) |
|
|
|
|
Working Notes:
Amount to be transferred to DRR = `900000 xx 25/100 = 225000`
Existing Balance in DRR = Rs 25000
Net Amount to be Transferred`= 225000 - 25000` = Rs 200000
Amount transferred to DRI `= 900000 xx 15/100 = 135000` (in three equal instalments of 45000 each)
APPEARS IN
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₹ 20,00,000
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Tata Motors Ltd. issued 40,000;7% Debentures of ₹ 100 each on 1st July,2009 redeemable at premium of 5% as under:
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It was decided to transfer amount out of profit to Debentures Redemption Reserve ₹ 2,00,000 on 31st March, 2012; ₹ 4,00,000 on 31st March , 2013 and balance on 31st March, 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realise them after last redemption . Paas journal entries ignoring interest .
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| Year | III | IV | V | VI |
| Amount (₹) | 10,00,000 | 20,00,000 | 30,00,000 | 40,00,000 |
Prepare 9% Debenture Account form 1st April, 2008 till all the debentures were redeemed.
Fill in the blank.
The portion of uncalled capital to be called only in the event of winding up of the company is called ____________.
On 1st April 2015, Mayfair Ltd. issued 4,000 9% debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 8%. The debentures were redeemable on 31st March 2019. The company created the necessary minimum amount of debenture redemption reserve and purchased the required amount of debenture redemption investments as per the provisions of Companies Act, 2013.
Pass the necessary journal entries for the redemption of debentures.
Relay Ltd. (an unlisted Non NBFC) redeems its 8,000, 10% Debentures of ₹ 100 each in instalments as follows:
| Date of Redemption | Debentures to be redeemed |
| 31st March, 2019 | 2,000 |
| 31st March, 2020 | 5,000 |
| 31st March, 2021 | 1,000 |
On the basis of the above details, what will be the amount of Debenture Redemption Reserve which the company will transfer to General Reserve on 31st March, 2021?
On 1st April, 2022, the following balances appeared in the books of Alpha Pvt. Ltd.
| 9% Debentures redeemable on 31st March, 2023, at a premium of 2% | ₹ 50,00,000 |
| Debenture Redemption Reserve | ₹ 5,00,000 |
The Debenture Redemption Investment, which was purchased by the company on 1st April, 2022, was realised at 101% on the date of redemption and the debentures were redeemed on the due date.
You are required to prepare the following accounts for the year 2022-23 in the books of Alpha Pvt. Ltd.
- Debenture holders' Account.
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Ronny Ltd. (an unlisted construction company) redeems its 7,000, 10% Debentures of ₹ 100 each at a premium of 5% in instalments, as follows:
| Date of Redemption | Debentures to be redeemed |
| 31st March, 2022 | 2,000 |
| 31st March, 2023 | 3,000 |
| 31st March, 2024 | 2,000 |
You are required to prepare for the year 2023-24:
- General Reserve Account.
- Debenture holders’ Account. (Ignore interest on Debentures).
