Page 60 - DEBK12

10.10 Double Entry Book Keeping—CBSE XII

2018
March 31 Bank A/c ...Dr. 37,500
To Debentures Redemption Investment A/c 37,500
(Fixed deposit encashed on redemption of 2,500 debentures)
March 31 8% Debentures A/c ...Dr. 2,50,000
Premium on Redemption of Debentures A/c ...Dr. 17,500
To Debentureholders’ A/c 2,67,500
(Amount due to debentureholders on redemption of debentures)

March 31 Debentureholders’ A/c ...Dr. 2,67,500
To Bank A/c 2,67,500
(Payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 25,000
To General Reserve A/c 25,000
(Amount proportionate to 2,500 debentures redeemed transferred
from DRR to General Reserve)

2018
April 30 Debentures Redemption Investment A/c ...Dr. 37,500
To Bank A/c 37,500
(Investment made for the amount equal to 15% of nominal value of
debentures to be redeemed on 31st March, 2019)
2019
March 31 Bank A/c ...Dr. 37,500
To Debentures Redemption Investment A/c 37,500
(Fixed deposit encashed on 2,500 debentures being reedemed)
March 31 8% Debentures A/c ...Dr. 2,50,000
Premium on Redemption of Debentures A/c ...Dr. 17,500
To Debentureholders’ A/c 2,67,500
(Amount due to debentureholders on redemption of debentures)

March 31 Debentureholders’ A/c ...Dr. 2,67,500
To Bank A/c 2,67,500
(Payment made to debentureholders)

March 31 Debentures Redemption Reserve A/c ...Dr. 25,000
To General Reserve A/c 25,000
(Balance of Debentures Redemption Reserve closed by transferring
it to General Reserve)
Note: Outstanding amount on debentures = ` 10,00,000
DRR, i.e., 10% of ` 10,00,000 = ` 1,00,000
Four equal annual instalments = 1/4 × ` 1,00,000 = ` 25,000.
Alternatively, Company may decide to transfer amount of DRR to General Reserve after
all the debentures are redeemed, i.e., on 31st March, 2019.