Question

Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013. The debentures were redeemable at a premium of 5% on 30th June, 2015. The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015. Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.
Ignoring interest on fixed deposit, pass necessary journal entries starting from 31st March, 2015 regarding redemption of debentures.

Answer 1

Answer:

Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013. The debentures were redeemable at a premium of 5% on 30th June, 2015. The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015. Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.

Ignoring interest on fixed deposit, pass necessary journal entries starting from 31st March, 2015 regarding redemption of debentures.

Hope it helps you to know that

Answer 2

The necessary journal entries starting from 31st March, 2015 regarding redemption of debentures are prepared below:

Explanation:

Given,

Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013.

The debentures were redeemable at a premium of 5% on 30th June, 2015.

The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015.

Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.

Amount transferred to DRR (25% of face value)

$=\mathrm{Rs} .38,00,000 \times 25 \%=\mathrm{Rs} .9,50,000$

Amount transferred to DRI (15% of face value)

$=\mathrm{Rs} .38,00,000 \times 15 \%=\mathrm{Rs} .5,70,000$

The necessary journal entries starting from 31st March, 2015 regarding redemption of debentures are prepared below: