Ts grewal practical problems of Redemption of Debentures (2023-2024)

 Redemption of Debentures Ts grewal solution volume-2(2023-2024):part-1

Page No 10.40:

Question 1:

Star Ltd. is a  manufacturer of chemical fertilisers. Its annual turnover is ` 50 crores. The company had issued 5,000, 12% Debentures of ` 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.

Answer:

Amount required to be transferred to DRR=25% of Face value of Debentures=25% of Rs 25,00,000=Rs 6,25,000

Page No 10.40:

Question 2:

Young India Ltd. had issued  following debentures:
(a) 1,00,000, 10% fully convertible debentures of ` 100 each on 1st April, 2016 redeemable by conversion after 5 years.
(b) 20,000, 10% Debentures of ` 100 each redeemable after 4 years , 25% Debentures in Cash and 75% by conversion.
State the amount of DRR required to be created as per the Companies Act,2013.

Answer:

(a) There is no need for creation of DRR because these debentures are fully convertible.

(b) DRR would be created for non-convertible part of debentures.

Amount Required to be transferred to DRR=25% of Face value of Debentures(Non-convertible) =25% of Rs 5,00,000(20,00,000×25%)=₹ 1,25,000

 

Page No 10.40:

Question 3:

Answer: Nil, Because DRR is not required to create for A listed company as per rule 18(7) of the Companies (Share capital and Debentures) Rules, 2014 (as amended w.e.f. 16th  August , 2019) .

Page No 10.40:

Question 4:

Answer: Nil, Because DRR is not required to create for A listed NBFC Company as per rule 18(7) of the Companies (Share capital and Debentures) Rules, 2014 (as amended w.e.f. 16th  August , 2019) .

Page No 10.41:

Question 5:

Answer: Nil, Because DRR is not required to create for SBI Housing Finance Ltd. Being , A listed HFC Company as per rule 18(7) of the Companies (Share capital and Debentures) Rules, 2014 (as amended w.e.f. 16th  August , 2019).

Page No 10.41:

Question 6:

Answer: Nil, Because DRR is not required to create for A Unlisted NBFC Company as per rule 18(7) of the Companies (Share capital and Debentures) Rules, 2014 (as amended w.e.f. 16th  August , 2019).

Page No 10.41:

Question 7:

Nirbhai Chemicals Ltd. issued ` 10,00,000; 6% Debentures of ` 50 each at a premium of 8% on 30th June, 2018 redeemable on 30th June, 2019. The issue was fully subscribed. Pass Journal entries for issue and redemption of debentures. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures? Also, state how much amount should be invested in specified securities?

Answer:

Section 71 (4) of the Companies Act, 2013 requires that an amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account. So, Rs 2, 50,000 is required to be transferred to DRR (i.e. 25% of 10,00,000). Further, Rule 18 (7) requires every company that is required to create DRR to invest an amount at least equal to 15% of the value of debentures in specified securities. So, Rs 1,50,000 is to be invested in specified securities (i.e. 15% of 10,00,000).

 

Journal In the Books of Nirbhai Chemicals Ltd.
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2018
June 30	Bank A/c	Dr.		10,80,000
	To 6% Debentures A/c				10,00,000
	To Securities Premium Reserve A/c				80,000
	(Debentures issued)
2019
March 31	Statement of Profit and Loss	Dr.		2,50,000
	To Debenture Redemption Reserve A/c				2,50,000
	(DRR created)
April 30	Debenture Redemption Investment A/c	Dr.		1,50,000
	To Bank A/c				1,50,000
	(Investment made in specified securities)
June 30	Bank A/c	Dr.		1,50,000
	To Debenture Redemption Investment A/c				1,50,000
	(Investments encashed)
June 30	6% Debentures A/c	Dr.		10,00,000
	To Debentureholders’ A/c				10,00,000
	(Amount on 6% debentures due)
June 30	Debentureholders’ A/c	Dr.		10,00,000
	To Bank A/c				10,00,000
	(Payment made on redemption of debentures)
June 30	Debenture Redemption Reserve A/c	Dr.		2,50,000
	To General Reserve A/c				2,50,000
	(Transfer of Debenture Redemption Reserve to General Reserve)

 

Note: Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

 

Journal
Date	Particular		L.F.	Debit Amount (`)	Credit Amount (`)
2019
Mar. 31	Debenture Interest A/c	Dr.		45,000
	To Debentureholders’ A/c				45,000
	(Interest on 6% debentures due for 9 months)
Mar.31	Debentureholders’ A/c	Dr.		45,000
	To Bank A/c				45,000
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		45,000
	To Debenture Interest A/c				45,000
	(Transfer of debenture interest to Statement of Profit and Loss)

Page No 10.41:

 

Question 8:

 

Export-Import Bank of India (EXIM Bank) issued 20,000, 10% Debentures of ` 100 each through public issue and 10,000, 10% Debentures of ` 100 each through private placement . State the amount of investment to be made by EXIM Bank before redemption of debentures. 

Answer:

 

The Companies Act, 2013 exempts Banking Companies to invest in specified securities.

Page No 10.41:

Question 10:

IFCI Ltd.(An All India Financial Institution) issued 10,00,000; 9% Debentures of ` 50 each on 1st April, 2011 redeemable on 1st April, 2019.  How much amount of Debentures Redemption Reserve is required before the redemption of debentures? Also, pass Journal entries for issue and redemption of debentures.

Answer:

Books of IFCI Ltd.
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
April 01	Bank A/c	Dr.		5,00,00,000
	To 9% Debenture Application A/c				5,00,00,000
	(Debenture application money received)
April 01	9% Debenture Application A/c	Dr.		5,00,00,000
	To 9% Debentures A/c				5,00,00,000
	(Debenture application money transferred to debenture account)
2017
April 01	9% Debentures A/c	Dr.		5,00,00,000
	To Debentureholders’ A/c				5,00,00,000
	(Debentures due for redemption)
April 01	Debentureholders’ A/c	Dr.		5,00,00,000
	To Bank A/c				5,00,00,000
	(Amount due for redemption paid to debenture holders)

 

Notes:

1. All India Financial Institutions are exempted from creating DRR. Hence, in this case, no DRR is to be created.
2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures  every year from April 01, 2011 to March 31, 2017 as given below.
 

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2011
Mar. 31	Debenture Interest A/c	Dr.		45,00,000
	To Debentureholders’ A/c				45,00,000
	(Interest on 9% debentures due)
Mar.31	Debentureholders’ A/c	Dr.		45,00,000
	To Bank A/c				45,00,000
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		45,00,000
	To Debenture Interest A/c				45,00,000
	(Transfer of debenture interest to Statement of Profit and Loss)

Page No 10.41:

Question 11:

On 31st March, 2003, G Ltd. An unlisted NBFC, had ` 8,00,000;9% Debentures due for redemption. The company had a balance of ` 1,40,000 in its Debentures Redemption Reserve . Pass necessary journal entries for redemption of debentures.

Answer:

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
31/3/2002*	Statement of Profit or Loss	Dr.		60,000
	To Debenture Redemption Reserve A/c				60,000
	(Surplus amount is transferred to DRR)
30/4/2002*	Debenture Redemption Investment A/c         Dr.			1,20,000
	To Bank A/c				1,20,000
	(Investment is made in specified securities equal to 15% of the value of debentures redeemed)
31/3/2003	9% Debentures A/c	Dr.		8,00,000
	To Debentureholders’ A/c				8,00,000
	(Debentures due for redemption)
31/3/2003	Bank A/c                                           Dr.			1,20,000
	To Debenture Redemption Investment A/c				1,20,000
	(Investment made in specified securities is now encashed)
31/3/2003	Debentureholders’ A/c	Dr.		8,00,000
	To Bank A/c				8,00,000
	(Amount paid to debentureholders)
31/3/2003	Debenture Redemption Reserve A/c	Dr.		2,00,000
	To General Reserve				2,00,000
	(DRR transferred to General Reserve)

Working Note:

Amount of DRR (25% of issued debentures)=8,00,000×25/100	=	2,00,000
Less; Amount aready exist in DRR	=	1,40,000
DRR to be created for redemption	=	60,000

Notes:

1. Interest is not calculated on Investment ent as rate of interest is not provided.
2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures for the years ending March 31, 2002 and March 31, 2003 as given below.  

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2002
Mar. 31	Debenture Interest A/c	Dr.		72,000
	To Debentureholders’ A/c				72,000
	(Interest on 9% debentures due)
Mar. 31	Debentureholders’ A/c	Dr.		72,000
	To Bank A/c				72,000
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		72,000
	To Debenture Interest A/c				72,000
	(Transfer of debenture interest to Statement of Profit and Loss)

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.

Page No 10.41:

Question 12:

On 31st March, 2018, W Ltd. had the following balances in its books:	`
9% Debentures	6,00,000
Debentures Redemption Reserve	50,000
Surplus,i.e., Balance in Statement of Profit and Loss	3,00,000

On that date, the company decided to transfer ` 1,00,000 to Debentures Redemption Reserve. It also decided to redeem  debentures of ` 3,00,000 on 30th June, 2018.

Pass necessary Journal entries in the books of the company.

Answer:

Books of W Ltd.
Journal
Date.	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
31/3/18	Statement of Profit or Loss	Dr.		1,00,000
	To Debenture Redemption Reserve A/c				1,00,000
	(Surplus transferred to Debenture Redemption Reserve)
30/4/18	Debenture Redemption Investment A/c                      Dr.			45,000
	To Bank A/c				45,000
	(Investment is made in specified securities equal to 15% of the value of debentures redeemed)
30/6/18	9% Debentures A/c	Dr.		3,00,000
	To Debentureholders’ A/c				3,00,000
	(Debenture due for redemption)
30/6/18	Bank  A/c                                                      Dr.			45,000
	To Debenture Redemption Investment A/c				45,000
	(Investment made in specified securities is now encashed)
30/6/18	Debentureholders’ A/c	Dr.		3,00,000
	To Bank A/c				3,00,000
	(Amount due to debentureholders paid)
30/6/18	Debenture Redemption Reserve A/c                           Dr.			75,000
	To General Reserve A/c				75,000
	(50% DRR transferred to General Reserve)

Working Notes:

Investment made in specified securities=3,00,000×15/00=4,5000

Note:
1. Here, the entry for transferring the amount of DRR to General Reserve A/c has been passed with 50% of DRR amount, since the company has not fully redeemed all its debentures. 

Therefore, 50% of DRR amount i.e. 50% of 1,50,000, transferred to General Reserve.

2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date	Particular		L.F.	Debit Amount (`)	Credit Amount (`)
2018
Mar. 31	Debenture Interest A/c	Dr.		33,750
	To Debentureholders’ A/c				33,750
	(Interest on 9% debentures due)
Mar.31	Debentureholders’ A/c	Dr.		33,750
	To Bank A/c				33,750
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		33,750
	To Debenture Interest A/c				33,750
	(Transfer of debenture interest to Statement of Profit and Loss)

Page No 10.41:

Question 13:

Mansi Ltd., an unlisted (Non-NBFC/HFC) had 6,000; 10% Debentures of ` 100 each due for redemption on 31st March, 2019. Assuming that the debentures were redeemed out of profits, pass necessary Journal entries for the redemption of debentures. There was a credit balance of ` 6,00,000 in Surplus, i.e., Balance in Statement of Profit and Loss.

Answer:

Journal
Date	Particulars			L.F.	Debit Amount (`)	Credit Amount (`)
2018
March 31	Statement of Profit and Loss*	Dr.			6,00,000
	To Debenture Redemption Reserve A/c					6,00,000
	(Surplus amount is transferred to Debenture Redemption Reserve)
April 30	Debenture Redemption Investment A/c**		Dr.		90,000
	To Bank A/c					90,000
	(Investment is made in specified securities equal to 15% of the value of debentures redeemed)
2019
March 31	10% Debentures A/c	Dr.			6,00,000
	To Debentureholders’ A/c					6,00,000
	(Debenture due for redemption)
March 31	Bank A/c		Dr.		90,000
	To Debenture Redemption Investment A/c					90,000
	(Investment made in securities, now encashed)
March 31	Debentureholders’ A/c	Dr.			6,00,000
	To Bank A/c	Dr.				6,00,000
	(Payment made to debentureholders)
March 31	Debenture Redemption Reserve A/c	Dr.			6,00,000
	To General Reserve A/c					6,00,000
	(Debenture Redemption Reserve transferred to General Reserve)

*In case of redemption of debentures by profits, 100% of the nominal value of debentures is transferred to DRR A/c.

**As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.

Note: Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date	Particular		L.F.	Debit Amount (`)	Credit Amount (`)
2018 & 2019
Mar. 31	Debenture Interest A/c	Dr.		60,000
	To Debentureholders’ A/c				60,000
	(Interest on 10% debentures due)
Mar. 31	Debentureholders’ A/c	Dr.		60,000
	To Bank A/c				60,000
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		60,000
	To Debenture Interest A/c				60,000
	(Transfer of debenture interest to Statement of Profit and Loss)

 

Page No 10.41:

Question 14:

India Textiles Corporation Ltd. has outstanding ` 50,00,000; 9% Debentures of ` 100 each due for redemption on 31st July, 2019. Pass Journal entries for redemption assuming that there is a balance of ` 3,00,000 in Debentures Redemption Reserve  on the date of redemption.

Answer:

Books of India Textiles Corporation Ltd.
Journal
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2019	Statement of Profit and Loss	Dr.		9,50,000
March 31	To Debenture Redemption Reserve A/c				9,50,000
	(Profit transferred to Debenture Redemption Reserve)
April 30	Debenture Redemption Investment A/c	Dr.		7,50,000
	To Bank A/c				7,50,000
	(Investment is made in specified securities equal to the 15% value of debentures redeemed)
2019
July 31	9% Debentures A/c	Dr.		50,00,000
	To Debentureholders’ A/c				50,00,000
	(Debentures due for redemption)
July 31	Bank A/c	Dr.		7,50,000
	To Debenture Redemption Investment A/c				7,50,000
	(Investment made in securities is now encashed)
July 31	Debentureholders’ A/c	Dr.		50,00,000
	To Bank A/c				50,00,000
	(Payment made to debentureholders)
July 31	Debenture Redemption Reserve A/c	Dr.		12,50,000
	To General Reserve A/c				12,50,000
	(Debenture Redemption Reserve transferred to General Reserve)

Working Notes:

WN1: Calculation of amount transferred to DRR

Amount for DRR (25% of issued debentures       

WN2: Calculation of amount Invested in Specified Securities

Amount of DRR (25% of issued debentures)=50,00,000×25/100	=	12,50,000
Less; Amount aready exist in DRR	=	3,00,000
DRR to be created for redemption	=	9,5s0,000

*As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.

Note: Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. However, the students' may journalise the entries related to interest on debentures as given below.

Journal
Date	Particular		L.F.	Debit Amount (`)	Credit Amount (`)
2019
Mar. 31	Debenture Interest A/c	Dr.		1,50,000
	To Debentureholders’ A/c				1,50,000
	(Interest on 9% debentures due)
Mar. 31	Debentureholders’ A/c	Dr.		1,50,000
	To Bank A/c				1,50,000
	(Payment of interest to debentureholders’)
Mar. 31	Statement of Profit and Loss	Dr.		1,50,000
	To Debenture Interest A/c				1,50,000
	(Transfer of debenture interest to Statement of Profit and Loss)

Page No 10.41:

Question 16:

Godrej Ltd., unlisted (Non-NBFC/HFC) has 20,000; 7% Debentures of ` 100 each due for redemption on 31st August, 2018. There is a balance of ` 3,50,000 in Debentures Redemption Reserve Account as on 31st March, 2016. Investment, as required by the Companies Act, 2013 is made on 1st April, 2017 in fixed deposit bearing interest @ 6% p.a. Bank deducted TDS @ 10% on its maturity which is 31st March, 2018.
Pass Journal entries for redemption of debentures.

Answer:

Journal  In the Books of Godrej Ltd.
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2017
Apr. 01	Debenture Redemption Investment A/c	Dr.		3,00,000
	To Bank A/c				3,00,000
	(Investment made in specified securities)
2018
Mar. 31	Bank A/c (3,00,000 + 16,200)	Dr.		3,16,200
	Tax Payable A/c	Dr.		1,800
	To Interest on Debenture Redemption Investment A/c				18,000
	To Debenture Redemeption Investment A/c				3,00,000
	(Investment encashed and interest received)
Mar. 31	Statement of Profit & Loss A/c	Dr.		1,50,000
	To Debenture Redemption Reserve A/c				1,50,000
	(DRR created)
Aug. 31	7% Debentures A/c	Dr.		20,00,000
	To Debentureholders' A/c				20,00,000
	(Amount on 7% debentures due)
Aug. 31	Debentureholders' A/c	Dr.		20,00,000
	To Bank A/c				20,00,000
	(Payment made on redemption of debentures)
Aug. 31	Debenture Redemption Reserve A/c	Dr.		5,00,000
	To General Reserve A/c				5,00,000
	(Transfer of Debenture Redemption Reserve to General Reserve)

Working Notes:

Calculation of amount transferred to DRR

Amount of DRR (25% of Debentures) =  20,00,000 × 25100=5,00,000

Less: Amount already exists in DRR                                         3,50,000          

DRR to be created for redemption                                            1,50,000

Note:

1. The year of transfer to DRR and investment has been assumed to be in 2014 in order to maintain consistency with the guidelines issued by Ministry of Corporate Affairs which requires that every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and investment if passed in any of the year then redemption would take place in the following year.

Page No 10.42:

Question 17:

Apollo Ltd., unlisted (Non-NBFC/HFC) issued 21,000; 8% Debentures of ` 100 each on 1st April, 2013 redeemable at a premium of 8% on 30th June, 2019. The company decided to transfer the required amount to Debentures Redemption Reserve in three equal annual instalments starting with 31st March, 2017. Required investment was made in Government Securities on 30th April, 2019. Ignore interest on debentures and also investment.
Pass necessary Journal entries regarding issue, transfer to DRR, investment, and redemption of debentures.

Answer:

Books of Apollo Ltd. Journal
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2013
April 01	Bank A/c	Dr.		21,00,000
	To 8% Debenture Application A/c				21,00,000
	(Debenture application money received)
	8% Debenture Application A/c	Dr.		21,00,000
	Loss on Issue of Debentures A/c	Dr.		1,68,000
	To 8% Debentures A/c				21,00,000
	To Premium on Redemption A/c				1,68,000
	(21,000 8% Debentures of Rs 100 each issued with the term repayable at 8% Premium)
2017
March 31	Statement of Profit and Loss	Dr.		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Profit transferred to Debenture Redemption Reserve)
2018
March 31	Statement of Profit and Loss	Dr.		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Profit transferred to Debenture Redemption Reserve)
2019
Mach 31	Statement of Profit and Loss	Dr.		1,75,000
	To Debenture Redemption Reserve A/c				1,75,000
	(Profit transferred to Debenture Redemption Reserve)
April 30	Debenture Redemption Investment A/c	Dr.		3,15,000
	To Bank A/c				3,15,000
	(Investment is made in government securities equal to 15% of the value of debentures redeemed)
June 30	8% Debenture A/c	Dr.		21,00,000
	Premium on Redemption Reserve A/c	Dr.		1,68,000
	To Debentureholders’ A/c				22,68,000
	(Debenture due for redemption along with premium)
	Bank A/c	Dr.		3,15,000
	To Debenture Redemption Investment A/c				3,15,000
	(Investment made in specifed securities now encashed)
	Debentureholders’ A/c	Dr.		22,68,000
	To Bank A/c				22,68,000
	(Payment made to debentureholders)
	Debenture Redemption Reserve A/c	Dr.		5,25,000
	To General Reserve A/c				5,25,000
	(Debenture Redemption Reserve transferred to General Reserve)

Working Note:

Calculation of Amount transferred to DRR

As prescribed by Section 71(4) of the Companies Act, 2013, companies are required to create DRR at 25% of the total value of debentures. Here, debentures worth Rs 21,00,000 are to be redeemed, so, the amount of DRR will be:

Amount of DRR (25% of issued debentures)=21,00,000×25/100	=	5,25,000
Annual installment of three years 52000/3	=	1,75,000

*
Note:R to be created =6,00,000 × 25100=Rs 1,50,000
1. As per circular no. 04/2015 issued by Ministry of Corporate Affairs (dated 11.02.2013), every company required to create/maintain DRR shall on or before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. Accordingly, entries for DRR and Investment have been passed in the previous accounting year.

Page No 10.43:

Question 26:

'Ananya Ltd.' had an authorised capital of ` 10,00,00,000 divided into 10,00,000 equity shares of ` 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March,2007 was ` 30 . The management decided to export its products to African countries . To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(a) Issue 47,500 equity shares at a premium of ` 100 per share .
(b) Obtain a long-term loan from bank which was available at 12% per annum.
(c) Issue 9% Debentures at a discount of 5%.
After evaluating these alternatives , the company decided to issue 1,00,000,9% Debentures on 1st April,2008. The face value of each debentures  was ` 100 . These debentures were redeemable in four installments starting from the end of third year, which were as follows:
 

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.

 

Answer:

9% Debentures Account
Dr.				Cr.
Date	Particulars	J.F.	Amount Rs		Date	Particulars	J.F.	Amount Rs
2009					2008
Mar. 31	Balance c/d		1,00,00,000		Apr. 01	Debenture Application A/c		95,00,000
					Apr. 01	Discount on Issue of Debentures A/c		5,00,000
			1,00,00,000					1,00,00,000
2010					2009
Mar. 31	Balance c/d		1,00,00,000		Apr. 01	Balance b/d		1,00,00,000
			1,00,00,000					1,00,00,000
2011					2010
Mar. 31	Debentureholders’ A/c		10,00,000		Apr. 01	Balance b/d		1,00,00,000
Mar. 31	Balance c/d		90,00,000
			1,00,00,000					1,00,00,000
2012					2011
Mar. 31	Debentureholders’ A/c		20,00,000		Apr. 01	Balance b/d		90,00,000
Mar. 31	Balance c/d		70,00,000
			90,00,000					90,00,000
2013					2012
Mar. 31	Debentureholders’ A/c		30,00,000		Apr. 01	Balance b/d		70,00,000
Mar. 31	Balance c/d		40,00,000
			70,00,000					70,00,000
2014					2013
Mar. 31	Debentureholders’ A/c		40,00,000		Apr. 01	Balance b/d		40,00,000
			40,00,000					40,00,000