Question

Illustration 20. On 1st April, 2014, a company issued 1,000; 9% Debentures of * 100 each at
2110 per debenture. The terms of issue provided for the redemption of 20,000 debentures
every year commencing from 31st March, 2016 either by purchase from Open Market or at par
by drawings at the company's option. The Board of Directors decided to transfer the required
amount of profits to Debenture Redemption Reserve on 31st March, 2015. The company
complying with the requirement of the Companies Act, 2013 made investment in fixed deposit
on 30th April, 2015.
The company purchased for cancellation Debentures of the face value of 8,000 at 95 per
debenture and of 12,000 at 90 per debenture during the year.
Journalise the above transactions and show how the gain (profit) on redemption would be
treated (Ignore the payment of interest).​

Answer 1

Answer:

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