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M.136 An Aid to Accountancy—CBSE XII

9. JOURNAL OF AMRIT DHARA LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
On Creation of DRR
Surplus, i.e., Balance in the Statement of Profit and Loss A/c ...Dr. 15,00,000
To Debentures Redemption Reserve A/c 15,00,000
(Being the amount transferred to DRR equal to 100% nominal value)
On 1st April of the Financial Year in which Redemption is due
Debentures Redemption Investment A/c ...Dr. 2,25,000
To Bank A/c 2,25,000
(Being the required investment made)
On Redemption
Bank A/c ...Dr. 2,43,000
To Debentures Redemption Investment A/c 2,25,000
To Interest Earned A/c 18,000
(Being the investment realised and interest received @ 8% p.a.)
10% Debentures A/c ...Dr. 15,00,000
Premium on Redemption of Debentures A/c ...Dr. 1,50,000
To Debentureholders’ A/c 16,50,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 16,50,000
To Bank A/c 16,50,000
(Being the payment made to debentureholders)
Debentures Redemption Reserve A/c ...Dr. 15,00,000
To General Reserve A/c 15,00,000
(Being the balance of DRR transferred to General Reserve)
Note: Debentures Redemption Reserve is created for total nominal (face) value of debentures outstanding, i.e.,
` 15,00,000 since redemption is out of profit.

10. JOURNAL OF STAR LTD.
Date Particulars L.F. Dr. (`) Cr. (`)

Sundry Assets A/c ...Dr. 30,00,000
Goodwill A/c ...Dr. 5,00,000
To Sundry Liabilities A/c 3,00,000
To Moon Ltd. 32,00,000
(Being the purchase of business of Moon Ltd.)
Moon Ltd. ...Dr. 32,00,000
Discount on Issue of Debentures A/c ...Dr. 1,20,000
To Bills Payable A/c 3,20,000
To 8% Debentures A/c 30,00,000
(Being 10% of the purchase consideration paid through bill and for the
rest issued 30,000; 8% Debentures of ` 100 each at a discount of 4%)
PurchasePrice -Part Payment
Note: No. of Debentures Issued =
Issue Price of a Debenture
`
` 32,00,000 - (10% of 32,00,000)
= = 30,000 debentures.
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