Question

A company has power in its articles to purchase out of profits its own debentures stock in the open market for cancellation . On 1st January 2020 the company applied rs 380,000 for the purchase of its own debentures @95% and cancelled them immediately. Show journal entries to the record of above.​

Answer 1

Answer:

Own Debentures Account Dr. 361000

To bank Account 361000

Debentures account Dr 380000

To Own Debentures Account 361000

To profit on cancellation of debentures account 19000

Explanation:

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