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Chapter 10 . Company Accounts—Redemption of Debentures 10.9

2013 Creation of DRR
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 25,000
To Debentures Redemption Reserve A/c 25,000
(Profit appropriated towards Debentures Redemption Reserve)
2014
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 25,000
To Debentures Redemption Reserve A/c 25,000
(Profit appropriated towards Debentures Redemption Reserve)
2015
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 25,000
To Debentures Redemption Reserve A/c 25,000
(Profit appropriated towards Debentures Redemption Reserve)
2016
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c (Note) ...Dr. 25,000
To Debentures Redemption Reserve A/c 25,000
(Profit appropriated towards Debentures Redemption Reserve)

2016
April 30 Debentures Redemption Investment A/c ...Dr. 75,000
To Bank A/c 75,000
(Investment made of amount equal to 15% of nominal value of
debentures to be redeemed on 31st March, 2017)
2017 Redemption of Debentures
March 31 Bank A/c ...Dr. 75,000
To Debentures Redemption Investment A/c 75,000
(Fixed deposit encashed on redemption of 5,000 debentures)

March 31 8% Debentures A/c ...Dr. 5,00,000
Premium on Redemption of Debentures A/c ...Dr. 35,000
To Debentureholders’ A/c 5,35,000
(Amount due to debentureholders on redemption of debentures)
March 31 Debentureholders’ A/c ...Dr. 5,35,000
To Bank A/c 5,35,000
(Payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 50,000
To General Reserve A/c 50,000
(Amount proportionate to 5,000 debentures redeemed transferred
from DRR to General Reserve)

2017
April 30 Debentures Redemption Investment A/c ...Dr. 37,500
To Bank A/c 37,500
(Investment made of amout equal to 15% of nominal value
of debentures to be redeemed on 31st March, 2018)