Question

IFCI Ltd.(An All India Financial Institution) issued 10,00,000; 9% Debentures of SRCC Ltd. ₹ 50 each on 1st April, 2011 redeemable on 1st April, 2017. How much amount of Debentures Redemption Reserve is required before the redemption of debentures ? Also,pass journal entries for issue and redemption of debentures.

Answer 1

The amount of Debentures Redemption Reserve is required before the redemption of debentures and the journal entries for issue and redemption of debentures are prepared below:

Explanation:

Given,

IFCI Ltd.(An All India Financial Institution) issued 10,00,000;

9% Debentures of SRCC Ltd. ₹ 50 each on 1st April, 2011 redeemable on 1st April, 2017.

1. No DRR is to be created for All India Financial Institutions.

2. Entries for interest on debentures have been ignored in the above solution as the question was silent in this regards. Howerer, the entries related to interest on debentures every year from April 01, 2011 to March 31, 2017 can be recorded as provided below.

The amount of Debentures Redemption Reserve is required before the redemption of debentures and the journal entries for issue and redemption of debentures are prepared below: