Accountancy, asked by vibhu9578, 11 months ago

Nirbhai Chemicals Ltd.issued ₹ 10,00,000; 6% Debentures of ₹ 50 each at a premium of 8% on 30th June, 2017 redeemable on 30th June, 2018. The issue was fully subscribed. Pass journal entries for issue and redemption of debentures. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures? Also, state how much amount should be invested in specified securities ?

Answers

Answered by aami1463

Answer:

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Answered by aburaihana123

The amount to be transferred to Debenture Redemption Reserve A/c and Debenture Redemption Investment A/c would be Rs. 2,50,000 and Rs. 1,50,000 respectively.

Explanation:

Given,

Nirbhai Chemicals Ltd.issued ₹ 10,00,000;

6% Debentures of ₹ 50 each at a premium of 8% on 30th June, 2017 redeemable on 30th June, 2018.

The issue was fully subscribed.

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

An amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account.

Thus, the amount to be transferred to Debenture Redemption Reserve A/c would be

$10,00,000 \times 25 \%=R s .2,50,000$

Further, as per Rule 18 (7 ),

Every company required to create Debenture Redemption Reserve is to invest an amount at least equal to 15% of the value of debentures in specified securities.

Thus, the amount transferred to Debenture Redemption Investment A/c would be

$10.00 .000 \times 15 \%=\mathrm{Rs} .1 .50,000$

The amount to be transferred to Debenture Redemption Reserve A/c and Debenture Redemption Investment A/c would be Rs. 2,50,000 and Rs. 1,50,000 respectively.

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