Question

On April 01, 2016 the following balances appeared in the books of Z. Ltd. Rs 6% Debentures 1,00,000 Debentures Redemption Reserve Fund 80,000 D.R. Reserve Fund Investments 80,000 The investments consisted of 4% Government securities of the face value of Rs 90,000. The annual instalment was Rs 16,400. On March 31, 2017, the balance at Bank was Rs 26,000 (after receipt of interest on D.R.Reserve Fund Investment). Investments were realised at 92% and the Debentures were redeemed. The interest for the year had already been paid. Show the ledger accounts affecting redemption.

Answer 1

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★ When debentures are redeemed out of profit, it is essential that an equal amount to the face value of the debentures redeemed will be transferred to Debenture Redemption Reserve Account

★ When all the debentures are redeemed, the Debenture Redemption Reserve Account is closed by transferring to General Reserve Account.☺️❤️

Answer 2

When debentures are redeemed out of profit, it is essential that an equal amount to the face value of the debentures redeemed will be transferred to Debenture Redemption Reserve Account.

★ When all the debentures are redeemed, the Debenture Redemption Reserve Account is closed by transferring to General Reserve Account.☺️❤️

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