In the books of XYZ Ltd.
Journal Entries
Date Particulars L.F. Amount
(Dr.)
Amount
(Cr.)
2021
1 Apr.
Bank A/ c [6000 X 95] Dr.
Discount on issue of 12% Debenture Dr.
[6000 X 5]
Loss on Issue of 12% Debentures [6000 X 10]
To 12% Debentures A/c [6000 X 100]
To Premium on redemption of 12%
Debentures [6000 X 10]
(Being 6000, 12 % Debentures of 100 each issued at
5% Discount & to be redeemed at 10% premium)
5,70,000
30,000
90,000
6,00,000
60,000
30
Apr.
12% DRR investment A/c Dr.
To Bank A/c
(Being 15% of 12% Debentures to be redeemed
in current year invested in securities i.e., 15% of
200000)
30,000
30,000
2022
31
Mar.
Profit & Loss A/c Dr.
To Debentures Redemption Reserve Al c
(Being 10 96 of 12 % Debentures issued transferred
to Debenture redemption Reserve.)
60,000
60,000
Interest on 12% Debentures A/c Dr.
(600000 X 12%)
To Bank A/c
(Being interest on 12% debentures paid.)
72,000
72,000
12% Debentures A/ c Dr.
Premium on redemption of 12 % Debentures
A/c
2,00,000
20,000
To 12% Debentures holder's A/c
(Being 12% Debentures made due for redemption)
2,20,000
12% Debenture holders A/c Dr.
To Bank A/c
(Being payment made to 12% Debenture
holders)
2,20,000
2,20,000
Profit & Loss Al c Dr.
To Discount on issue of 12% Debentures Al c
To Loss on issue of 12% Debentures Al c
To Interest on 12% Debentures A/c
(Being discount & loss on issue of debentures
and interest of the year transferred to Profit
& Loss A/c)
1,62,000
30,000
60,000
72,000
Debentures Redemption Reserve Al c Dr.
To General Reserve Al c
(Being proportionate amount of DRR transferred to
General Reserve i.e. 1/3 of 60,000)
20,000
20,000
2023
31
Mar.
(400000 X 12%) Interest on 12% Debentures Dr.
To Bank A/c
(Being interest on 12% debentures of the year paid)
48,000
48,000
12% Debentures Al c Dr.
Premium on Redemption of 12% Debentures Dr.
To 12% Debenture holders Al c
(Being 12% Debentures made due for redemption)
2,00,000
20,000
2,20,000
12% Debenture holders Al c Dr.
To Bank A/c
(Being payment made to 12% Debenture holders)
2,20,000
2,20,000
Profit & Loss Al c Dr.
To Interest on 12% Debentures A/c
(Being interest on 12% debentures of the year
transferred to Profit & Loss Ale)
48,000
48,000
Debentures Redemption Reserve Al c Dr.
To General Reserve Al c
(Being proportionate amount of DRR transferred to
General Reserve i.e. 1/3 of 60,000)
20,000
20,000
2024
31
Mar.
(200000 X 12%) Interest on 12% Debentures Dr.
To Bank A/c
(Being interest on 12% debentures of the year paid)
24,000
24,000
Bank A/c Dr.
To Debentures Redemption Investment A/c
(Being debentures redemption investment sold at
par)
30,000
30,0000
12% Debentures Al c Dr.
Premium on Redemption of 12% Debentures Dr.
To 12% Debenture holders Al c
(Being 12% Debentures made due for redemption)
2,00,000
20,000
2,20,000
12% Debenture holders Al c Dr.
To Bank A/c
(Being payment made to 12% Debenture holders)
2,20,000
2,20,000
Profit & Loss Al c Dr.
To Interest on 12% Debentures A/c
(Being interest on 12% debentures of the year
transferred to Profit & Loss Ale)
24,000
24,000
Debentures Redemption Reserve Al c Dr.
To General Reserve Al c
(Being proportionate amount of DRR transferred to
General Reserve i.e. 1/3 of 60,000)
20,000
20,000
Notes:
1. Debentures Redemption Reserve is set aside of amount @ 10% of Outstanding
Debentures, i.e. 10% of 6,00,000.
2. After every redemption, amount of proportionate DRR to amount of debentures
redeemed is transferred from DRR to General Reserve.
3. Debentures Redemption Investment is realised at the time of last redemption, since equal
number of debentures are redeemed in each lot.