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Question -

What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?



Answer -

S.No.

Particulars

L.F.

Debit

Amount

тВ╣

Credit

Amount тВ╣

(a)

Debenture A/c

Dr.

Premium on Redemption of Debenture A/c

Dr.

To Debenture Holders A/c

(Amount due for┬а redemption of Debentures)

Debenture Holders A/c

Dr.

To Bank A/c

(Payment made to Debenture Holders)

(b)

Debenture A/c

Dr.

To Debenture Holders A/c

(Amount due for redemption of debentures that were issued at

premium with term of redeemable at par)

Debenture Holders A/c

Dr.

To Bank A/c

(Payment made to Debenture Holders)

(c)

Debenture A/c

Dr.

Premium on Redemption of Debenture A/c

Dr.

To Debentures Holders A/c

(Amount due for redemption on debentures that were issued at

discount with the term of redeemable at premium)

Debenture Holders A/c

Dr.

To Bank A/c

(Payment made to Debenture Holders)

┬а

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