Question

JB Ltd. issued ₹ 10,00,000; 6% Debentures at a premium of 4% redeemable at a premium of 5% after four years. The debentures were issued on 1st April,2014. Pass journal entries at the time of issue and redemption of debentures assuming that all legal requirements were complied.

Answer 1

Answer:

JB Ltd. issued ₹ 10,00,000; 6% Debentures at a premium of 4% redeemable at a premium of 5% after four years. The debentures were issued on 1st April,2014. Pass journal entries at the time of issue and redemption of debentures assuming that all legal requirements were complied.

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Answer 2

The necessary journal entries at the time of issue and redemption of debentures assuming that all legal requirements were complied are prepared below:

Explanation:

Given,

JB Ltd. issued ₹ 10,00,000;

6% Debentures at a premium of 4% redeemable at a premium of 5% after four years.

As per Section 71 (4) of the Companies Act, 2013

Companies are required to create DRR at 25% of the total value of debentures.

Accordingly, DRR would be created for:

Debenture Redemption Reserve (25%)

$=10,00,000 \times \frac{25}{100}=Rs.2,50,000$

Note:

Interest on Debentures has been ignored as the question was silent.

However, the students' may pass the following entries given below for their reference.

The necessary journal entries at the time of issue and redemption of debentures assuming that all legal requirements were complied are prepared below: