Chapter-10 Redemtion of Debenture

  1. Redemption of Debentures
  2. What is meant by Redemption of Debentures? [1]
  3. What is meant by Redemption of Debentures out of profits? [1]
  4. Give two sources of finance for Redemption Debenturs. [1]
  5. List any three modes of redemption of debentures. [1]
  6. On 31.3.2014, Jatin Limited had Rs.8,00,000, 9% debentures due for redemption. The company had a balance of Rs.3,40,000 in its Debenture Redemption Reserve Account. Pass necessary journal entries for redemption of debentures. [3]
  7. On 31.3.2004 Jatin Limited had the following balances in its books: 9% Debentures ……………………………. Rs.6,00,000 Debenture Redemption Reserve ………Rs.2,00,000 On that date, the company decided to transfer Rs.1,00,000 to Debenture Redemption Reseve and redeemed Rs. 3,00,000 worth of debentures. Half of the DRR was transferred to General Reserve on the same day. Pass necessary journal entries in the books of the company. [3]
  8. Jatin Limited issued Rs.10,00,000, 9% debentures at a premium of 4% redeemable at a premium of 5% after four years. The Debentures were issued on January 1, 2011. Pass the journal entries at the time of issue and redemption of debentures. [3]
  9. VK Limited redeemed Rs.50,00,000, 8% Debentures at a premium of 10% out of profits on 31.3.2006. Pass necessary journal entries for the redemption of debentures.
  10. Jatin Limited has issued 20,000, 9% Debentures of Rs.100 each of which half the amount is due for redemption on March 31st 2008. The Company has in its Debenture Redemption Reserve Account a balance of Rs.4,40,000. Record the necessary journal entries at the time of Redemption of Debentures. (3)
  11. Jatin Limited had 10,000, 9% debentures of Rs.100 each which is due for redemption on March 31, 2008. The Company has a Debenture Redemption Reserve a balance of Rs.4,00,000 on that date. Record the necessary journal entries at the time of redemption debentures. (3)
  12. Jatin Limited issued 1,000, 15% debentures of Rs.100 each issued at a discount of 5% redeemable at 10% premium after 10 years. Give journal entries for the issue and redemption. (4)
  13. Pass the necessary journal entries for the issue and redemption of debentures in the following cases: (a) 15,000, 10% Debentures of Rs.100 each issued at 10% premium, repayable at par (b) 6,00,000, 12% Debentures of Rs.500 each issued at 5% premium, repayable at 10% premium. (4)
  14. Jatin Limited issued Rs.1,00,000, 15% Debentures of Rs.100 each at a premium of 5% redeemable at a premium of 10% at the end of 4 years. The Board of Directors decided to transfer the minimum required amount to Debentures Redemption Reserve Account at the time of redemption. Pass necessary journal entries at the time of redemption of debentures. [3]
  15. Jatin Limited had Rs.8,00,000, 9% Debentures due to be redeemed out of profits on 1st Oct., 2009 at a premium of 5%. The company had a Debenture Redemption Reserve of Rs.4,14,000. Pass necessary journal entries at the time of redemption. [3]
  16. Jatin Limited issued 20,000, 12% Debentures of Rs.100 each at a discount of 10% with the condition that they will be redeemed at a premium of 5% after the expiry of three years. Pass the necessary journal entries for the isue and redemption of these debentures after 3 years of issue. [3]
  17. On 1.1.2007, Jatin Limited issued 5,000, 10% Debentures of Rs.100 each at par which were repayable at a premium of 10% on 31.12.2011. on the date of maturity, company decided to redeem the above mentioned 10% Debentures as per the terms of issue, out of profits. The Statement of Profit & Loss shows a credit balance of Rs.6,00,000 on this date. The offer was accepted by all the debentureholders and all the debentures were redeemed. Pass necessary journal entries in the books of the company only for the redemption of debentures. If the company follows Section 117 of the Companies Act, 1956. [3]
  18. Jatin Limited has 8,000, 11% Debentures of Rs.100 each due for redemption on March 31, 2012. The company has a debenture redemption reserve of Rs.3,00,000 on that date. Assuming that no interest is due, record the necessary journal entries at the time of redemption of debentures. [3]
  19. Jatin Limited purchased a running business of KK Limited on 1st April, 2012, which includes assets of the value of Rs.12,00,000 and Liabilities worth Rs.1,40,000 at an agreed value of Rs.11,00,000. Company issued 12% Debentures of Rs.100 each at a premium of 10% in full satisfaction of purchase consideration. The Debentures were redeemable 3 years later at a premium of 5%. Pass the entries to record the above including redemption of debentures.
  20. On 1.1.2009, Jatin Limited issued 15,000, 10% Debentures of Rs.100 each at par which were repayable at a premium of 15% on 31.12.2013. on the date of maturity, company decided to redeem the above mentioned 10% Debentures as per the terms of issue, out of profits. The Statement of Profit & Loss shows a credit balance of Rs.20,00,000 on this date. The offer was accepted by all the debentureholders and all the debentures were redeemed. Pass necessary journal entries in the books of the company only for the redemption of debentures. If the company follows Section 117 of the Companies Act, 1956. [3]
  21. Jatin Limited has 10,000; 8% Debentures of Rs.100 each due for redemption on 31st March, 2012. Assume that Debentures Redemption Reserve has a balance of Rs.3,80,000 on that date. Record the necessary journal entries at the time of redemption of debentures. [3]
  22. Jatin Ltd. issued 5,000, 10% Debentures of Rs. 100 each on 1st April, 2012. The issue was fully subscribed. According to the terms of issue, interest on debentures is payable half-yearly on 30th September and 31st March and tax deducted at source is 10%. Pass the necessary journal entries related to the debenture interest for the half yearly ending on 31st March, 2013 and transfer of interest on debentures to Statement of Profit and Loss. (3)
  23. Ltd. issued 2,000, 127o debentures of 100 each on 1″ April 2012. The issue was fully subscribed. According to the terms of issue, interest on the debentures is payable half-yearly on 30e September and 3l’t March and the tax deducted at source is 1070. Pass necessary journal entries related to the debenture interest for the halfyearly ending 31’t March, 2013 and transfer of interest on debentures of the year to the Statement of Profit & Loss. (3)
  24. (Purchase of Own Debentures) Jatin Limited purchased its own debentures of Rs.100 each at Rs.95 per debentures for the purpose of redemption. Pass necessary journal entries. [3]
  25. Jatin Limited purchased 5,000 of its own 8% Debentures of Rs.1,000 each at Rs.987 per debentures. It also purchased another lot of 600 debentures of the same series at Rs.986. Record necessary journal entries in the books of the company. [3]
  26. Jatin Limited purchased for cancellation 1,000 of its own 8% debentures of Rs.250 each at Rs.200 per debenture. The Board of Directors have also decided to transfer the required amount to Debenture Redemption Reserve Account. Journalise the transactions in the books of Jatin Limited. [3]
  27. Jatin Limited had a balance of Rs.55,00,000 in its Statement of Profit and Loss. Instead of declaring a dividend, it decided to redeem its Rs.50,00,000, 8% debentures at a premium of 10%. Pass necessary journal entries in the books of company. [3]
  28. On 1.4.2005 Jatin Limited had made an issue of 3,000, 6% Debentures of Rs.100 each. The company during the year 2006-07 purchased for cancellation of 600 of these debentures. The company paid Rs.95 per debenture for 500 debentures and Rs.98 per debenture for the rest. The expenses on purchase amounted to Rs.400. Pass Journal entries in the books of company. [3]
  29. In the beginning of the year 2014, Jatin Limited made an issue of 2,000, 10% debentures of Rs.100 each. The terms of issue provided for the redemption of Rs.20,000 annually, commencing from the end of 2014, the company purchased for cancellation Rs.8,000 of its Debentures at Rs.96 Rs.6,000 at Rs.98 and Rs.2,000 at Rs.94 The Board of Directors decided to redeem the Debentures. [3]
  30. Jatin Limited purchased its own 200 Debentures of the face value of Rs.20,000 from the open market for immediate cancellation at Rs.92. Pass journal entries. [3]
  31. Pass necessary journal entries in the books of Jatin Limited for the following transactions. Purchased 800 of own 9% Debentures of Rs.100 each for Rs.95 per debenture for redemption. [3]
  32. Pass necessary journal entries in the books of Jatin Limited for the following transactions. Purchased 750 of own 12% Debentures of Rs.1,000 each for Rs.900 per debenture for redemption for immediate cancellation. [3]
  33. Pass necessary journal entries in the books of Jatin Limited for the following transactions. Purchased 3,000 of own 12% Debentures of Rs.100 each for Rs.97 per debenture for redemption for immediate cancellation. [3]
  34. Pass necessary journal entries in the books of Jatin Limited for the following transactions. Purchased 930 of own 11% Debentures of Rs.1,000 each for Rs.975 per debenture for redemption for immediate cancellation. [3]
  35. On 1.4.2009 Jatin Limited had made an issue of Rs.2,500, 6% debentures of Rs.100 each. The company during the year 2010-11 purchased for cancellation 500 of these debentures. The company paid Rs.90 per debenture for 400 debenture and Rs.94 per debenture for the rest. The expenses of purchases amounted to Rs.700 [3]
  36. Jatin Limited decided to redeem its 1,250, 12% Debentures of Rs.100 each. It purchased 850 debentures from the open market at Rs.96 per debenture. The remaining debentures were redeemed out of profit. The company has already made a provision for Debenture Redemption Reserve in its books. Pass necessary journal entries in the books of the company for the above transactions. [4]

Author: Ravi Kashyap

Commerce Expert

Leave a Reply

Your email address will not be published. Required fields are marked *