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M.290 An Aid to Accountancy—CBSE XII

9. JOURNAL OF X LTD.
Date Particulars L.F. Dr. (`) Cr. (`)

2017
Mar. 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 86,000
To Debentures Redemption Reserve A/c 86,000
(Being the required amount transferred to Debentures Redemption
Reserve) (Note)
On or
Before
April 30 Debentures Redemption Investment A/c ...Dr. 1,20,000
To Bank A/c 1,20,000
(Being 15% of ` 8,00,000 the nominal (face) value of debentures to be
redeemed, invested)
2018
Mar. 31 Bank A/c ...Dr. 1,20,000
To Debentures Redemption Investment A/c 1,20,000
(Being the investment encashed)
9% Debentures A/c ...Dr. 8,00,000
Premium on Redemption of Debentures A/c ...Dr. 40,000
To Debentureholders’ A/c 8,40,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 8,40,000
To Bank A/c 8,40,000
(Being the amount due paid to the debentureholders)
Debentures Redemption Reserve A/c ...Dr. 2,00,000
To General Reserve A/c 2,00,000
(Being the balance of Debentures Redemption Reserve transferred to
General Reserve)
Note: DRR is created for 25% nominal (face) value of Outstanding Debentures, i.e., ` 8,00,000. Debentures
Redemption Reserve has already a balance of ` 1,14,000. Thus, Amount transferred to DRR is equal to
` 86,000 (i.e., ` 2,00,000 – ` 1,14,000).
10. JOURNAL OF SHARMA LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 Sundry Assets A/c ...Dr. 2,80,000
To Creditors A/c 50,000
To Verma Ltd. 2,30,000
(Being the business purchased of Verma Ltd.)
April 3 Verma Ltd. ...Dr. 50,000
To Cash A/c 50,000
(Being the part payment made to Verma Ltd.)
April 5 Verma Ltd. ...Dr. 1,80,000
To 6% Debentures A/c 1,50,000
To Securities Premium Reserve A/c 30,000
(Being the issue of 1,500; 6% Debentures of ` 100 each at 20%
premium against purchase price)
Purchase Price – Part Payment
Note: No. of Debentures to be issued =
Issue Price
` 2,30,000 – ` 50,000
= = 1,500 Debentures.
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