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


                     Solution:                      In the Books of Pragati Ltd.
                                                           JOURNAL
                     Date     Particulars                                          L.F.   Dr. (`)   Cr. (`)
                     2015
                     March  31  Surplus, i.e., Balance in Statement of Profit and Loss A/c   ...Dr.      3,50,000
                                To  Debentures Redemption Reserve A/c                             3,50,000
                             (Being the transfer of profits to Debentures Redemption Reserve) (WN 2)
                     April   1  Debentures Redemption Investment  A/c        ...Dr.      1,87,500
                                To  Bank A/c                                                      1,87,500
                             (Being the fixed deposit placed with Bank for 15% nominal value of
                             debentures to be redeemed)
                     2016
                     March  31  Interest on Debentures A/c (WN 1)            ...Dr.      4,00,000
                                To  Debentureholders’ A/c                                         3,60,000
                                To  TDS Payable A/c                                                40,000
                             (Being the interest on debentures due and tax deducted @ 10%)
                     March  31  Debentureholders’ A/c                        ...Dr.      3,60,000
                             TDS Payable A/c                                 ...Dr.       40,000
                                To  Bank A/c                                                      4,00,000
                             (Being the payment of debentures’ interest and TDS payable)
                     March  31  8% Debentures A/c                            ...Dr.      12,50,000
                                To  Debentureholders’ A/c                                         12,50,000
                             (Being the payment due to debentureholders on redemption)
                     March  31  Debentureholders’ A/c                        ...Dr.      12,50,000
                                To  Bank A/c                                                      12,50,000
                             (Being the payment due to debentureholders discharged)
                     March  31  Debentures Redemption Reserve A/c            ...Dr.      3,12,500
                                To  General Reserve A/c                                           3,12,500
                             (Being one-fourth of DRR transferred to General Reserve on
                             redemption of one-fourth debentures)
                     March  31  Statement of Profit and Loss                 ...Dr.      4,00,000
                                To  Interest on Debentures A/c                                    4,00,000
                             (Being the interest on debentures transferred)
                     2017
                     March  31  Interest on Debentures A/c                   ...Dr.      3,00,000
                                To  Debentureholders’ A/c (WN 3)                                  2,70,000
                                To  TDS Payable A/c                                                30,000
                             (Being the interest due on debentures)
                     March 31   Debentureholders’ A/c                        ...Dr.      2,70,000
                             TDS Payable A/c                                 ...Dr.       30,000
                                To  Bank A/c                                                      3,00,000
                             (Being the debentures’ interest and TDS paid)
                     March  31  8% Debentures A/c                            ...Dr.      12,50,000
                                To  Debentureholders’ A/c                                         12,50,000
                             (Being the payment due to debentureholders on redemption)
                     March  31  Debentureholders’ A/c                        ...Dr.      12,50,000
                                To  Bank A/c                                                      12,50,000
                             (Being the payment due to debentureholders discharged)
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