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M.326 An Aid to Accountancy—CBSE XII

(b) JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
Before Redemption of Debentures
Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 10,00,000
To Debentures Redemption Reserve A/c (25% × ` 40,00,000) 10,00,000
(Being the transfer of profit to Debentures Redemption Reserve)
Debentures Redemption Investment A/c ...Dr. 6,00,000
To Bank A/c 6,00,000
(Being the investment made @ 15% of the face value of the debentures)
On Redemption of Debentures
Bank A/c ...Dr. 6,00,000
To Debentures Redemption Investment A/c 6,00,000
(Being the investment encashed)
9% Debentures A/c ...Dr. 40,00,000
Premium on Redemption of Debentures A/c ...Dr. 12,00,000
To Debentureholders’ A/c 52,00,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 52,00,000
To Bank A/c 52,00,000
(Being the amount due to debentureholders paid)
Debentures Redemption Reserve A/c ...Dr. 10,00,000
To General Reserve A/c 10,00,000
(Being the transfer of Debentures Redemption Reserve to
General Reserve on the redemption of all the debentures)

PART B

18. `
Cash payment to acquire Plant and Machinery (WN) (1,50,000)
Cash receipts from Sale of Plant and Machinery 25,000
Cash Used in Investing Activities (1,25,000)

Working Note:
Dr. PLANT AND MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 3,60,000 By Bank A/c (Sale) (` 20,000 + 25% of ` 20,000) 25,000
To Statement of Profit and Loss (Profit) 5,000 By Depreciation A/c 40,000
To Bank A/c (Purchase)—Balancing Figure 1,50,000 By Balance c/d 4,50,000
5,15,000 5,15,000
19. No Flow.

Reason: Sale of Marketable Securities at par means it is only movement between
items of Cash or Cash Equivalents.