Question

X Limited had issued 20000 8% debenture of 100 each it wants to redeem one fourth of these debentures at 5% premium how much amount it must be transferred to debenture redemption reserve if it has already a balance of rupees 100000 and debenture redemption reserve account​

Answer 1

X Ltd must have to transfer in Debenture Redemption Reserve Account

Rs 25000

Explanation:

Because as per Compnay Act

25% amount mus be Transfer to Debenture Redemption Reserve Account

As per Question 1/4 of 20,00,000 =5,00,000 is to be redemed

and 25% of 5,00,00 =1,25000 should be transfered to Deb Red Reserve

Whereas 1,00,000 is already in Deb Red Reserve account

So we have to transfter Balance amount 125000-100000= 25000

into Debenture Redemption Reserve Account