Page 237 - ISCDEBK-12

Joint Stock Company—Redemption of Debentures 9.11
Solution: In the Books of Ashoka Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2012 Issue of Debentures
Sept. 1 Bank A/c (10,000 × ` 100) ...Dr. 10,00,000
To Debentures Application and Allotment A/c 10,00,000
(Being the debentures application money received on issue of debentures)
Sept. 1 Debentures Application and Allotment A/c (10,000 × ` 100) ...Dr. 10,00,000
Loss on Issue of Debentures A/c (` 10,00,000 × 7/100) ...Dr. 70,000
To 8% Debentures A/c 10,00,000
To Premium on Redemption of Debentures A/c 70,000
(Being the issue of debentures at par but redeemable at premium)
2013 Creation of DRR
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 62,500
To Debentures Redemption Reserve A/c 62,500
(Being the profit appropriated towards Debentures Redemption Reserve)
March 31 Statement of Profit and Loss ...Dr. 70,000
To Loss on Issue of Debentures A/c 70,000
(Being the loss on issue of debentures transferred)
2014
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 62,500
To Debentures Redemption Reserve A/c 62,500
(Being the profit appropriated towards Debentures Redemption Reserve)
2015
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 62,500
To Debentures Redemption Reserve A/c 62,500
(Being the profit appropriated towards Debentures Redemption Reserve)
2016
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 62,500
To Debentures Redemption Reserve A/c 62,500
(Being the profit appropriated towards Debentures Redemption Reserve)
April 1 Debentures Redemption Investment A/c ...Dr. 75,000
To Bank A/c 75,000
(Being the investment made of amount equal to 15% of nominal
value of debentures to be redeemed on 31st March, 2017)

2017 Redemption of Debentures
March 31 Bank A/c ...Dr. 37,500
To Debentures Redemption Investment A/c 37,500
(Being the half fixed deposit encashed on redemption of 5,000 debentures)

March 31 8% Debentures A/c ...Dr. 5,00,000
Premium on Redemption of Debentures A/c ...Dr. 35,000
To Debentureholders’ A/c 5,35,000
(Being the amount due to debentureholders on redemption of debentures)