1.

Ruchi Ltd. issued 42,000, 7% Debentures of Rs 100 each on 1st April, 2011, redeemable at a premium of 8% on 31st March 2015. The company decided to create required Debenture Redemption Reserve on 31st March 2014. The company invested the funds as required by law in a fixed deposit with State Bank of India on 1st April, 2014 earning interest at 10% per annum. Tax was deducted at source by the bank on interest at 10%. Pass necessary Journal Entries regarding issue ans redemption of debentures.

Answer»

Ruchi Ltd. issued 42,000, 7% Debentures of Rs 100 each on 1st April, 2011, redeemable at a premium of 8% on 31st March 2015. The company decided to create required Debenture Redemption Reserve on 31st March 2014. The company invested the funds as required by law in a fixed deposit with State Bank of India on 1st April, 2014 earning interest at 10% per annum. Tax was deducted at source by the bank on interest at 10%. Pass necessary Journal Entries regarding issue ans redemption of debentures.



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