Question

What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?

Answer 1

S.No.	Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
(a)	Debenture A/c			Dr.
	Premium on Redemption of Debenture A/c			Dr.
		To Debenture Holders A/c
	(Amount due for  redemption of Debentures)
	Debenture Holders A/c			Dr.
		To Bank A/c
	(Payment made to Debenture Holders)
(b)	Debenture A/c			Dr.
		To Debenture Holders A/c
	(Amount due for redemption of debentures that were issued at premium with term of redeemable at par)
	Debenture Holders A/c			Dr.
		To Bank A/c
	(Payment made to Debenture Holders)
(c)	Debenture A/c			Dr.
	Premium on Redemption of Debenture A/c			Dr.
		To Debentures Holders A/c
	(Amount due for redemption on debentures that were issued at discount with the term of redeemable at premium)
	Debenture Holders A/c			Dr.
		To Bank A/c
	(Payment made to Debenture Holders)