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Model Test Papers M.187

April 1 Debentures Redemption Investment A/c ...Dr. 15,000
To Bank A/c 15,000
(Being the amount invested in specified securities equal to
15% of amount of redeemable debentures)
At the time of Redemption:
Bank A/c ...Dr. 16,200
To Debentures Redemption Investment A/c 15,000
To Interest Earned A/c 1,200
(Being the investment realised and interest received on investment @ 8% p.a.)
10% Debentures A/c ...Dr. 1,00,000
Premium on Redemption of Debentures A/c ...Dr. 10,000
To Debentureholders’ A/c 1,10,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 1,10,000
To Bank A/c 1,10,000
(Being the payment made to Debentureholders)
Debentures Redemption Reserve A/c ...Dr. 25,000
To General Reserve A/c 25,000
(Being the transfer of DRR to General Reserve)
Or
JOURNAL OF ANUPAMA LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
On Creation of DRR:
Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 2,50,000
To Debentures Redemption Reserve A/c 2,50,000
(Being the profit transferred to DRR to make the reserve equivalent to
25% of the value of Debentures)
On 1st April of the Financial Year in which Redemption is Due:
Debentures Redemption Investment A/c ...Dr. 1,50,000
To Bank A/c 1,50,000
(Being the amount invested in specified securities equal to 15% of the
amount of redeemable debentures)
On Redemption:
Bank A/c ...Dr. 1,62,000
To Debentures Redemption Investment A/c 1,50,000
To Interest Earned A/c 12,000
(Being the debentures redemption investment realised and interest received)
9% Debentures A/c ...Dr. 10,00,000
To Debentureholders’ A/c 10,00,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 10,00,000
To Bank A/c 10,00,000
(Being payment made to debentureholders)
Debentures Redemption Reserve A/c ...Dr. 2,50,000
To General Reserve A/c 2,50,000
(Being the amount in DRR A/c transferred to General Reserve)
Note: An amount at least equal to 25% of the Nominal (Face) Value of Debentures Outstanding is credited
to Debentures Redemption Reserve Account and investment is made in specified securities of amount
equal to at least 15% of the nominal value of debentures to be redeemed.