Page 232 - ISCDEBK-12

9.6 Double Entry Book Keeping (Section A)—ISC XII

Sept. 30 Debentures Redemption Reserve A/c ...Dr. 1,25,000
To General Reserve A/c 1,25,000
(Being one-third of DRR transferred to General Reserve on
redemption of one-third debentures)
2017
March 31 10% Debentures A/c ...Dr. 5,00,000
To Debentureholders’ A/c 5,00,000
(Being the second lot, i.e., one-third debentures, i.e., 500 debentures
became due for redemption)
Debentureholders’ A/c ...Dr. 5,00,000
To Bank A/c 5,00,000
(Being the amount paid to debentureholders)
Debentures Redemption Reserve A/c ...Dr. 1,25,000
To General Reserve A/c 1,25,000
(Being the transfer of DRR to General Reserve in proportion to
500 Debentures redeemed)
Sept. 30 Bank A/c ...Dr. 75,000
To Debentures Redemption Investment A/c 75,000
(Being the investment redeemed)
Sept. 30 10% Debentures A/c ...Dr. 5,00,000
To Debentureholders’ A/c 5,00,000
(Being the third and final lot, i.e., one-third debentures, i.e.,
500 debentures became due for redemption)
Debentureholders’ A/c ...Dr. 5,00,000
To Bank A/c 5,00,000
(Being the amount paid to debentureholders)
Debentures Redemption Reserve A/c ...Dr. 1,25,000
To General Reserve A/c 1,25,000
(Being the DRR transferred to General Reserve on redemption
of debentures)

Illustration 4.
N Ltd. issued 10,000; 9% Debentures of ` 100 each at par on April, 2014 with the condition that
they will be redeemed at a premium of 5% after the expiry of five years.
Pass Journal entries for issue and redemption of these debentures along with the entries for
DRR. Investment is to earn interest @ 6% p.a.
Solution: In the Books of N Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)

2014
April 1 On Issue of Debentures
Bank A/c ...Dr. 10,00,000
To Debentures Application and Allotment A/c 10,00,000
(Being the amount received on 10,000 debentures @ ` 100 each)