Page 200 - MA-12

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

March 31 Debentureholders’ A/c ...Dr. 5,35,000
To Bank A/c 5,35,000
(Being the payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 1,25,000
To General Reserve A/c 1,25,000
(Being the amount proportionate to 5,000 debentures redeemed
transferred to General Reserve)
2017
April 30 Debentures Redemption Investment A/c ...Dr. 37,500
To Bank A/c 37,500
(Being the investment made of amount equal to 15% of nominal value
of debentures to be redeemed on 31st March, 2018)
2018
March 31 Bank A/c ...Dr. 37,500
To Debentures Redemption Investment A/c 37,500
(Being the fixed deposit encashed on redemption of 2,500 debentures)
March 31 8% Debentures A/c ...Dr. 2,50,000
Premium on Redemption of Debentures A/c ...Dr. 17,500
To Debentureholders’ A/c 2,67,500
(Being the amount due to debentureholders on redemption of debentures)
March 31 Debentureholders’ A/c ...Dr. 2,67,500
To Bank A/c 2,67,500
(Being the payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 62,500
To General Reserve A/c 62,500
(Being the amount proportionate to 2,500 debentures redeemed
transferred to General Reserve)
April 30 Debentures Redemption Investment A/c ...Dr. 37,500
To Bank A/c 37,500
(Being the investment made for the amount equal to 15% of
nominal value of debentures to be redeemed on 31st March, 2019)
2019
March 31 Bank A/c ...Dr. 37,500
To Debentures Redemption Investment A/c 37,500
(Being the fixed deposit encashed on 2,500 debentures being reedemed)
March 31 8% Debentures A/c ...Dr. 2,50,000
Premium on Redemption of Debentures A/c ...Dr. 17,500
To Debentureholders’ A/c 2,67,500
(Being the amount due to debentureholders on redemption of debentures)
March 31 Debentureholders’ A/c ...Dr. 2,67,500
To Bank A/c 2,67,500
(Being the payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 62,500
To General Reserve A/c 62,500
(Being the Debentures Redemption Reserve closed by transferring
it to General Reserve)

Note: Outstanding amount on debentures = ` 10,00,000
DRR, i.e., 25% of ` 10,00,000 = ` 2,50,000
Four equal annual instalments = 1/4 × ` 2,50,000 = ` 62,500.