Question

Tata Motors Ltd. issued 40,000; 7% Debentures of ₹ 100 each on 1st July, 2009 redeemable at premium of 5% as under:
On 31st March, 2015 – 16,000 Debentures
On 31st March, 2016 – 16,000 Debentures
On 31st March, 2017 – 8,000 Debentures
It was decided to transfer amount out of profit to Debentures Redemption Reserve ₹ 2,00,000 on 31st March, 2012; ₹ 4,00,000 on 31st March, 2013 and balance on 31st March, 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realise them after last redemption. Paas journal entries ignoring interest.

Answer 1

Journal Entries :

1) Bank A/c

To Deb. Application and Allotment

2) Deb. Application and Allotment A/c

Loss on issue of Debenture A/c

To 5% Debentures A/c

To Premium on Redemption

Answer 2

The necessary journal for the given transactions are prepared below:

Explanation:

Given,

Tata Motors Ltd. issued 40,000;

7% Debentures of ₹ 100 each on 1st July, 2009 redeemable at premium of 5% as under:

On 31st March, 2015 – 16,000 Debentures

On 31st March, 2016 – 16,000 Debentures

On 31st March, 2017 – 8,000 Debentures

Calculation of amount of Debenture Redemption Reserve,

Amount for DRR (25%)

$=\left(40,00,000 \times \frac{25}{100}\right) = Rs. 10,00,000$

Less : Amount transferred in 2012

$=Rs. 2,00,000$

Less : Amount transferred in 2013

$=Rs.4,00,000$

Amount transferred in 2014

$=Rs.4,00,000$

The necessary journal entries for the given transactions are prepared below: