Question

Godrej Ltd. has 20,000; 7% Debentures of ₹ 100 each due for redemption on 31st August, 2017. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015. Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest @ 6 % p.a. Bank deducted TDS @ 10 % on its maturity which is 31st March, 2017.
Pass journal entries for redemption of debentures.

Answer 1

Answer:

Godrej Ltd. has 20,000; 7% Debentures of ₹ 100 each due for redemption on 31st August, 2017. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015. Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest @ 6 % p.a. Bank deducted TDS @ 10 % on its maturity which is 31st March, 2017.

Pass journal entries for redemption of debentures. I will be there at your question my number is 9752572916

Answer 2

The necessary journal entries for redemption of debentures are prepared below:

Explanation:

Given,

Godrej Ltd. has 20,000;

7% Debentures of ₹ 100 each due for redemption on 31st August, 2017.

There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015.

Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest @ 6 % p.a. Bank deducted TDS @ 10 % on its maturity which is 31st March, 2017.

Calculation of amount transferred to DRR

Amount for DRR (25% of Debenture Issued)

$=20,00,000 \times \frac{25}{100}=Rs.5,00,000$

Less: Amount alredy exist in Debenture Redemption Reserve

$=Rs. 3,50,000$

Debenture Redemption Reserve to be areated for redemtion

$=1, 50,000$

Note:

In order to maintain consistency with the guidelines issued by Ministry of Corporate Affairs, the year of transfer to DRR and investment has been assumed to be in 2014 because guidelines say that every company is required to create/maintain BRR shall on or before the 30 th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31 st day of March next following year.

Accordingly, entries for DRR and investment if passed in any of the year then redemption would take place in the following year.

The necessary journal entries for redemption of debentures are prepared below: