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On January 1, 2012, X Ltd issued 40,000, 9% debentures of Rs. 100 each at Rs. 95. The terms of issue provided that, beginning with 2014 Rs. 2,00,000 debentures should be redeemed either by drawings at par or by purchase in the open market every year. The expenses of issue amounted to Rs. 12,000 which were written-off in 2012. The company also wrote off Rs. 40,000 every year from Discount on Debentures Account. At the end of 2014, debentures to be redeemed were repaid by drawing. During 2015, to company purchased for cancellation 2,000 debentures at the market price or Rs. 98 on December 31, the expense being Rs. 400. Interest on debentures is payable at the end of every calender year. Pass the journal entries in the books of the company to record these transactions. |
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Answer» On January 1, 2012, X Ltd issued 40,000, 9% debentures of Rs. 100 each at Rs. 95. The terms of issue provided that, beginning with 2014 Rs. 2,00,000 debentures should be redeemed either by drawings at par or by purchase in the open market every year. The expenses of issue amounted to Rs. 12,000 which were written-off in 2012. The company also wrote off Rs. 40,000 every year from Discount on Debentures Account. At the end of 2014, debentures to be redeemed were repaid by drawing. During 2015, to company purchased for cancellation 2,000 debentures at the market price or Rs. 98 on December 31, the expense being Rs. 400. Interest on debentures is payable at the end of every calender year. Pass the journal entries in the books of the company to record these transactions. |
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