Sunday, December 11, 2016

AHSEC - Accounting for Share capital and Debentures – Comprehensive Practical problems for March’ 2017 Exam

AHSEC - Accounting for Share capital – Comprehensive Practical problems for March’ 2017 Exam
Average 22 marks expected from this chapter
MCQ – 2, Theoretical Question – 2+5, Practical problems – 5+8
A. Questions relating to Cash book and Balance sheet (Long Questions Carrying 8 Marks)
Q. (2010). A. Ltd was registered with an authorised capital of 5, 00,000 divided into 50,000 Equity shares of Rs. 10 each. The company issued 30,000 shares to the public payable as follows:
On application Rs. 2 per share.
On allotment Rs. 3 per share and the balance in two equal calls.
The company received applications for 20,000 shares and received all the money except the final call on 200 shares held by Raju. Expenses on issue amounted to Rs. 500. Pass Journal entries and show how these figures will appear in the Balance Sheet of the company.
Q. (2012). Ashok Publications Ltd. issues 3,000 shares of Rs. 10 each, payable as follows:
On application Rs. 2
On allotment Rs. 3
On first call Rs. 2
And the balance when required.
                3,200 shares were applied for applications for Rs. 3,000 were accepted by the Directors and the balance applications were rejected and money returned. Allotment money was duly received and First call money was received on 2,950 shares. Pass Journal entries in the books of the company for the above transactions.

Q. (2014, 2016). Assam Tea Ltd. has an authorized capital of Rs. 10, 00,000/- divided into Rs. 1, 00,000 equity shares of Rs. 10/- each. The directors decided to issue 50,000 shares to the public at a premium of 10% payable as follows:
On Application Rs. 3/-
On Allotment (including premium) Rs. 5/-
And the balance on 1st and final call.
The company received applications for 60,000 shares. The directors decided to reject the excess applications and the money thereon was refunded. All the shares were duly subscribed for, called up and paid up. Give Journal entries and prepare a Cash Book in the books of the Company.        
Q. Assam Tea Ltd. has an authorized capital of Rs. 10, 00,000/- divided into Rs. 1, 00,000 equity shares of Rs. 10/- each. The directors decided to issue 50,000 shares to the public at a premium of 20% payable as follows:
On Application (including premium @ Rs. 1 per share) Rs. 3/-
On Allotment (including premium @ Rs. 1 per share) Rs. 5/-
And the balance on 1st and final call.
The company received applications for 60,000 shares. The directors decided to reject the excess applications and the money thereon was refunded. All the shares were duly subscribed for, called up and paid up. Give Journal entries and prepare a Cash Book in the books of the Company.                                        
Q. (2015). X Ltd. Issued 2,000 shares of Rs. 100/- each at a premium of Rs. 20 payable as follows:
Rs. 30/- on Application.
Rs. 50/- on Allotment (including securities premium Rs. 20/-)
Rs. 40/- on First Call & Final Call.
All the shares were duly subscribed for, called up and paid up, except Miss Nitu who holding 300 shares failed to pay First & Final call money. Show entries in the Cash Book and Journal of the company for the above transactions.              
Q. (2011.)TCL Ltd. issued 12,000 equity shares of Rs. 10 each, payable Rs.2 On application, Rs. 3 on allotment, Rs. 3 on first call and balance in final call. All the share were applied and allotted. The company made up to first call. One share holder who was allotted 400 shares paid his entire amount on first call and another share holder who was allotted 300 shares failed to pay first call money. Journalise the above transaction in the books of the company.
Q. TCL Ltd. issued 12,000 equity shares of Rs. 10 each, payable Rs.2 On application, Rs. 3 on allotment, Rs. 3 on first call and balance in final call. All the share were applied and allotted. The company made up to first call. One share holder who was allotted 400 shares paid his entire amount on first call and another share holder who was allotted 300 shares failed to pay first call money which he paid with final call money. Final call is made after 2 months from the date of first call. Interest on arrear and calls in advance is charges as per Table “A”. Journalise the above transaction in the books of the company. Also prepare cash book and balance sheet.
Q. (2002). Guwahati Company Ltd. Issued 10,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application Rs. 3 per share.
On allotment Rs. 5 per share (including premium)
On first and final call Rs. 4 per share.
                All the shares were subscribed for and the allotment money was received in full. In due course the first and final call was made and the amount due was received with the exception of 100 shares. These 100 shares were forfeited and 50 of the forfeited shares were subsequently reissued as fully paid for a consideration of 8 per share. Give Journal entries in the books of      the company.
Q. (2005). ABC Ltd has issued 10,000 equity shares of Rs. 10 each at a premium of Rs. 2 each. Payable as follows:
Rs. 2 on application.
Rs. 5 on allotment including premium of Rs. 2
And Rs. 5 on first and final call.
The shares have been fully subscribed called up and paid up except the following:
(a) Allotment and first and final call money on 500 shares held by X and
(b) First and final call money on 600 shares held by Y.
All these shares have been forfeited and reissued at 10% discount as fully paid. Expenses on reissue have been Rs. 500. Give journal entries in the books of Company.
Q. (2006). Assam Cement Ltd. issued 50,000 equity shares of Rs. 10 each at a premium of Rs. 2 each, payable as under:
On application Rs. 2
On allotment Rs. 5 (including premium Rs. 2)
On first and final call Rs. 5.
All the shares were subscribed, called up and paid up except allotment and call money on 500 shares. These shares were forfeited and 300 of them were re-issued at Rs. 9 each as fully paid. Expenses on reissue were Rs. 200. Pass the necessary journal entries to record the above transactions.
Q. (2007). Sony Ltd. issued 10,000 equity shares of Rs. 100 each, payable as Rs. 30 on application, Rs. 50 on allotment and Rs. 20 on first and final call. The shares were fully subscribed, called up and paid up except the following:
(a) Rajeev holding 500 shares failed to pay allotment and call money and
(b) Sanjeev holding 800 shares failed to pay the call money.
All these shares were forfeited and subsequently reissued as fully paid at a discount of Rs. 20 per share. Expenses on reissue were Rs. 500. Give Journal entries in the books of the company.
Q. (2009). Kamrup Foods Ltd. issued 10,000 Equity shares of Rs. 10 each at a discount of 10% payable as under:
On application Rs. 2 per share;
On allotment Rs. 3 per share (including discount);
On first and final call Rs. 4 per share.
Applications were received for 8,000 shares and all these applications were accepted. All money due were received except the first and final call money on 300 shares which were   forfeited. Subsequently 200 of the forfeited shares were reissued at Rs. 7 per share as fully paid up. Pass necessary journal entries to record the above transactions.
Q. (2013). Karan Ltd. decided to issue 10000 shares of Rs.100 each at a discount of 10%, payable as follows:
On Application – Rs.30
On Allotment – Rs.40 (After deducting discount)
Balance on 1st and final call.
The company received 9000 applications. All the shares were duly accepted and allotted. All the calls were duly made and all call money received accordingly. Give Journal Entries and prepare a Balance Sheet.
Q. Famous Company Ltd. issued 6,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application Rs. 3 per share
On allotment Rs. 5 per share including premium.
On first and final call Rs. 4 per share.
Subscriptions were received for Rs. 10,000 shares. The excess money was refunded and the allotment money was received in full. In due course, the first and final cal was made and the amount due was received with the exception of 200 shares. These 200 shares were forfeited and 50 of the forfeited shares were subsequently reissued as fully paid for a consideration of Rs. 6 per share. Pass necessary journal entries and prepare the Cash book of the Company recording the above transactions. Also show the equity shares capital account and Balance sheet.       
Q. (2001). Eastern Traders Ltd. Offered for public subscription 20,000 equity shares of Rs. 10 each at a premium of Rs. 10 per share. The payment was to be made as follows:
On application Rs. 20 per share.
On allotment Rs. 40 (including premium).
On first and final call Rs. 50.
Applications received were for 35,000 shares. Applications for 10,000 shares were rejected and money was returned and those totaling for 15,000 shares were allotted 10,000 shares on prorata and remaining application were allotted in full. The directors made the final call and one shareholder hold the 500 shares failed to pay the call money and as a consequences his shares were forfeited. 200 of these shares were re-issued as fully paid at Rs. 80 per share and the amount was received. Give Journal entries in the books of the company.
Q. (1999). Famous Company Ltd. issued 6,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application Rs. 3 per share
On allotment Rs. 5 per share including premium.
On first and final call Rs. 4 per share.
Subscriptions were received for Rs. 10,000 shares. The excess money was refunded and the allotment money was received in full. In due course, the first and final cal was made and the amount due was received with the exception of 200 shares. These 200 shares were forfeited and 50 of the forfeited shares were subsequently reissued as fully paid for a consideration of Rs. 6 per share. Prepare the Cash book of the Company recording the above transactions. Also show the equity shares capital account.
Q. Eastern Traders Ltd. Offered for public subscription 20,000 equity shares of Rs. 10 each at a premium of Rs. 10 per share. The payment was to be made as follows:
On application Rs. 20 per share.
On allotment Rs. 40 (including premium).
On first and final call Rs. 50.
Applications received were for 35,000 shares. Applications for 10,000 shares were rejected and money was returned and those totaling for 15,000 shares were allotted 10,000 shares on prorata and remaining application were allotted in full. The directors made the final call and one shareholder hold the 500 shares failed to pay the allotment and call money and as a consequences his shares were forfeited. 200 of these shares were re-issued as fully paid at Rs. 80 per share and the amount was received. Give Journal entries in the books of the company.
B. Questions Relating to Forfeiture of Shares and Re-issue of forfeited shares:  (5 Marks Expected)
a)      A Ltd. forfeited 500 shares of Rs. 10/- each, Rs. 8/- paid, for non-payment of final call of Rs. 2/- each. Give Journal entry of forfeiture of share.        2016
b)      X Ltd. Decided to forfeit 1,000 shares of Rs. 10/- each for non-payment of allotment money for Rs. 4/- each and 1st and final call money of Rs. 3/- each. Give journal entry for the forfeiture of shares. 2015
c)       X Ltd. company forfeited 800 shares of Rs.10 each issued at par for non-payment of 1st call Rs.2 and final call Rs.3 each. Out of these, 500 shares are re-issued at 10% discount. Give journal entries in the books of the company. 2014
d)      Patowary Co. forfeited 400 shares of Rs. 10 each fully called up for non-payment of final call                of Rs. 3 per share, 250 of these shares were re-issued as fully paid up for Rs. 8 per share. Journalise the above transaction in the books of company.  (2011)
e)      800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of final call of Rs. 2 per share. These shares were reissued at Rs. 10 per share fully paid-up.
f)       800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of final call of Rs. 2 per share. 700 shares were reissued at Rs. 8 per share fully paid-up. Expenses on re-issue amounted to Rs.100.
g)      800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of first call of Rs. 2 per share. Final call of Rs. 2 per share is not made. These shares were reissued at Rs. 8 per share fully paid-up. Expenses on re-issue amounted to Rs.100.
h)      800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of first call of Rs. 2 per share. Final call of Rs. 2 per share is not made. These shares were reissued at Rs. 7 per share partly paid-up.
i)        800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of first call of Rs. 2 per share. Final call of Rs. 2 per share is not made. These shares were reissued at Rs. 10 per share for Rs.8 paid up.
j)        800 Shares of Rs. 10 each were forfeited for the non-payment of first call of Rs. 2 per share. Final call of Rs. 2 per share is not made. 100 shares were reissued at Rs. 7 per share fully paid-up.
k)      800 Shares of Rs. 10 each issued at a premium of Re.1 per share were forfeited for the non-payment of first call of Rs. 2 final call of Rs. 2 per share. These shares were reissued at a discount of Rs. 3 per share.
l)        800 Shares of Rs. 10 each issued at a premium of Re.1 per share were forfeited for the non-payment of first call of Rs. 2 final call of Rs. 2 per share. These shares were reissued at Rs. 12 per share fully paid-up.
m)    800 Shares of Rs. 10 each issued at a premium of Rs. 2 per share were forfeited for the non-payment of first call of Rs. 2 final call of Rs. 2 per share. These shares were reissued at Rs. 10 per share fully paid-up.
n)      800 Shares of Rs. 10 each issued at a premium of Rs. 2 per share were forfeited for the non-payment of allotment Rs. 3, first call of Rs. 2 and final call of Rs. 2 per share. These shares were reissued at Rs. 12 per share fully paid-up.
o)      Nitin a shareholder, holding 1,000 shares of Rs. 10 each did not pay the allotment of Rs. 4 (including premium of Rs. 1) and the first and final call of Rs. 3. His shares were forfeited after the first and final call. Pass the journal entry to give effect to the forfeiture.
p)      Nitin a shareholder, holding 1,000 shares of Rs. 10 each did not pay the allotment of Rs. 4 (including premium of Rs. 1) and the first and final call of Rs. 3. His shares were forfeited for non-payment of allotment and call money. Pass the journal entry to give effect to the forfeiture.
q)      (2004, 2008, 2013). Indian Express Ltd has forfeited the following shares of Rs. 100 each for non-payment of allotment and call money.
(a) 100 shares held by X who has paid only the application money @ Rs. 10 each.
(b) 200 shares held by Y who has paid only the application and allotment money @ Rs. 10 and Rs. 20 each respectively.
(c) 300 shares held by Z who has paid only the application, allotment and the first call money @ Rs. 10, Rs. 20 and Rs. 30 respectively. Shares have been fully called up. All the shares are forfeited and are re-issued at 10% discount. Give journal entries.

Issue and Redemption of Debenture – Comprehensive Practical problems for March’ 2017 Exam
Average 17 marks expected from this chapter
MCQ – 1, Theoretical Question – 2+3, Practical problems – 8+5
Issue of Debentures for cash (2014, 2016)
1. A company issued 10%, 1,000 debentures of Rs. 100 each at 10% premium payable full on application. Give journal entries.
2. A company issued 10%, 1,000 debentures of Rs. 100 each at 10% premium payable Rs. 50 on application and Rs. 60 on allotment all the debentures are fully subscribed. Give journal entries.
3. A company issued 10%, 1,000 debentures of Rs. 100 each at 10% discount, payable Rs. 50 on application and Rs. 40 on allotment. Debentures are fully subscribed. Give journal entries.
4. Fair Deal Ltd. invited applications for the issue of 2000, 10%Debentures of Rs.100 each at a discount of 10% payable Rs.30 on application on 1st May, 2010, Rs.30 on allotment (after deducting discount) on 1st June, 2010 and balance on first and final call on 1st July, 2010. All the debentures were fully subscribed. Debentures money was duly called and paid up.  Give the Journal Entries and show how the debentures and Debenture Discount will be shown in the Balance sheet of the company.
5. Tata Motors Ltd. invited applications for the issue of 3,000, 10% debentures of Rs. 100/- each at a premium of 10% payable Rs. 30/- on application, Rs. 40/- on allotment (including premium) and the balance on first and final call. All the debentures were subscribed and the debenture money was duly called and paid up. Give Journal entries and show how Debentures Account will be shown in the Balance Sheet of the Company.
6. Tata Motors Ltd. invited applications for the issue of 3,000, 10% debentures of Rs. 100/- each at a premium of 10% payable Rs. 30/- on application, Rs. 40/- on allotment (including premium) and the balance on first and final call. Applications were received for 2800 debentures and the debenture money was duly called and paid up except allotment and call money on 500 debentures. Give Journal entries and show how Debentures Account will be shown in the Balance Sheet of the Company.
7. Tata Motors Ltd. invited applications for the issue of 3,000, 10% debentures of Rs. 100/- each at a premium of 10% payable Rs. 30/- on application, Rs. 40/- on allotment (including premium) and the balance on first and final call. Applications were received for 4,000 debentures and excess application money of 600 debentures were sent letter of regret and balance transferred to allotment. All the debentures were duly called and paid up. Give Journal entries and show how Debentures Account will be shown in the Balance Sheet of the Company. Also prepare cash book.

Issue of Debentures with redemption option (2012, 2013, 2014, 2015, 2016 exam)
1. Show by means of Journal entries how you will record the following issue:  
(a) X. Ltd. issue 8,000, 12% debenture of Rs 100 each at par, redeemable at the end of 5 year at par.
(b) Y. Ltd. issue 8,000, 12% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year at par.
(c) Z. Ltd. issue 8,000, 12% debenture of Rs 100 each at a premium of 5%, redeemable at the end of 5 year at par.
(d) P. Ltd. issue 5,000, 12% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year at a premium of 5%.
(e) A. Ltd. Issues 6,000, 10% debenture of Rs 100 each at a premium of 5%, redeemable at the end of 5 year at a premium of 10%.
(f) B. Ltd. issue 7,000, 11% debenture of Rs 100 each at par, redeemable at the end of 5 year at a premium of 5%.
2. Swadip Petrochemicals Ltd. issued Rs. 10, 00,000 12% Debentures of Rs.100 each. Give Journal Entries for issue and redemption of debentures in the books of the company under the following situations:                      
(a) Issued at par and redeemable after 5 years at par.
(b) Issued at Par and redeemable after 5 years at a premium of 5%.
(c) Issued at a premium of 5% and redeemable after 5 years at par.
(d) Issued at a premium of 5% and redeemable after 5 years at a premium of 10%.
(e) Issued at a discount of 5% and redeemable after 5 years at par.
(f) Issued at a discount of 5% and redeemable after 5 years at a premium of 10%.

Issue of Debentures for consideration other than cash
1. A company purchased a machinery from Y at an agreed value of Rs. 3,60,000 to be discharged by issuing 10% debentures of Rs. 100 each at par. Give journal entries.
2. A company purchased a machinery from Y at an agreed value of Rs. 3,60,000 to be discharged by issuing 10% debentures of Rs. 100 each at 10% discount. Give journal entries.
3. A company purchased a machinery from Y at an agreed value of Rs. 4,40,000 to be discharged by issuing 10% debentures of Rs. 100 each at a premium of 20%. Give journal entries.
4. A company purchased a machinery from Y at an agreed value of Rs. 4,17,000 to be discharged by issuing 10% debentures of Rs. 100 each at a premium of 10%. Fractional debentures are paid in cash. Give journal entries.
5. A company purchased a machinery from Y at an agreed value of Rs. 3,60,000 to be discharged by issuing 3,000 10% debentures of Rs. 100 each. Give journal entries.
6. A company took assets of Rs. 2, 00,000 and liabilities of Rs. 50,000 and issued 10% debenture of Rs. 100 each. Record the entries.
7. A company purchased assets of book value of Rs. 2,00,000 and liabilities of Rs. 50,000 at a purchase consideration of Rs. 1,65,000 to be discharged by issuing 10% debenture of Rs. 100 each at a premium of Rs. 10 each. Give journal entries.
8. A company purchased assets of book value of Rs. 2,00,000 and liabilities of Rs. 50,000 at a purchase consideration of Rs. 1,20,000 to be discharged by issuing 10% debenture of Rs. 100 each at a premium of 10%. Give journal entries.
9. A company purchased assets of book value of Rs. 2,00,000 and liabilities of Rs. 50,000 at a purchase consideration of Rs. 1,20,000 to be discharged by paying Rs. 32,000 in cash and balance by issuing 10% debenture of Rs. 100 each at a premium of 10%. Give journal entries.
10. A company purchased assets of book value of Rs. 2,00,000 and liabilities of Rs. 50,000 at a purchase consideration of Rs. 1,20,000 to be discharged by paying Rs. 32,000 in cash and balance by issuing 10% debenture of Rs. 100 each at a discount of 10%. Give journal entries.

Treatment of Discount and Loss on issue of debentures (2013, 2015)
1. A Company has issued Rs.1, 00,000 10%Debenture at 5% discount repayable at 5% premium after 4 years. Give journal entries for issue and show the loss on issue of debentures account over 4 years.              
2. Guwahati Engineering Limited issued 10000 6% Debentures of Rs.10 each at a discount of 5% but repayable after 5 years at a premium of 10%. Show the entries in the books of the company and also the accounting treatment of loss on issue of debentures for 5 years.               
3. A company has issued Rs. 2, 00,000, 10% debentures at 5% discount, repayable for four annual equal instalments at 5% premium. Give Journal entries and show the Loss on Issue of Debenture A/c over 4 years.
4. A company has issued Rs. 1, 00,000 debentures at a discount of 10% on 1st Jan. 2016. The debentures are repayable at par by:
1st Year = Nil
2nd Year = 25,000
3rd Year = 50,000
4th Year = 25,000
Give Journal entry for issue and show the Discount Account over the years.
5. A company has issued Rs. 1, 00,000 debentures at a discount of 10% on 1st Jan. 2016. The debentures are repayable at par by:
1st Year = Nil
2nd Year = 25,000 (At the end of 6 months)
3rd Year = 50,000 (At the end of 3 months)
4th Year = 25,000 (At the end of the year)
Give Journal entry for issue and show the Discount Account over the years.

Redemption of Debentures – Purchase of own Debentures
1. A company purchased its own debenture of Rs. 100 each of the face value of Rs. 30,000 from open market for cancellation at Rs. 95 out of profits. Record the transaction.
2. A company purchased its 300 own debenture of Rs. 100 each from open market for cancellation at Rs. 95. Record the transaction.
3. X Ltd. decided to redeem Rs. 1, 00,000, 10% debentures. It purchased Rs. 80,000 debentures in the open market at Rs. 97.50, the expenses being Rs. 400 and balance at Rs. 99. Pass Journal entries.
4. X Ltd. purchased 5,000 of its own 8% debentures of Rs. 1,000 each at Rs. 987 per debenture. It also purchased another lot of 600 debentures of the same series at Rs. 986 per debenture. The debentures were purchased for the purpose of cancellation. Record necessary journal entries in the books of the company.

Redemption of Debentures – Conversion of Debentures
1. Redeemed 800, 9% debentures of Rs. 100 each by converting the same into equity shares of Rs. 100 each issued at a premium of 25%.
2. Rs. 2, 00,000, 14% Debentures of Rs. 100 each issued at a 5% discount and redeemable at 10% premium after 4 years by converting them 15% Preference shares of Rs. 10 each issued at a premium of 10%.
3. Rs. 2, 00,000, 14% Debentures of Rs. 100 each issued at 5% premium and redeemable at 10% premium after 4 years by converting them into equity shares of Rs. 10 each issued at a premium of 10%.
4. Rs. 2, 00,000, 14% Debentures of Rs. 100 each issued at par and redeemable at 20% premium after 4 years by converting them into 10% Debentures of Rs. 10 each issued at a discount of 30%.
5. Pass necessary journal entries in the books of the Company in following cases for redemption of 1,000, 12% Debentures of Rs. 100 each issued at par:
a)      Debentures redeemed at a premium of 10% by conversion into Equity Shares issued at par.
b)      Debentures redeemed at a premium of 10% by conversion into Equity Shares issued at a premium of 25%.
c)       Debentures redeemed at a premium of 10% by conversion into Equity Shares issued at a discount of 20%.
6. Janata Iron Stores Pvt. Ltd. redeemed Rs. 30, 00,000, 8% debentures issued at premium of 5% as follows: Rs. 12, 00,000, 8% debentures were converted into equity shares of Rs. 100 each issued at a premium of Rs. 25 per share and the balance by converting them into 8% preference shares of Rs. 100 each issued at a discount of Rs. 10 per share. Pass the necessary journal entries of in the books of the company.

Redemption of Debentures – Sinking fund method
1. On 1st April 2016 Assam Ltd. issue 3,000, 10% Debentures of Rs. 100 each, repayable at par at the end of 3 years. It has been decided to set up a Sinking Fund for this purpose of their redemption. The investments are expected to earn interest at 4% p.a. The Sinking Fund table shows that Rs. 0.320348 invested each year amount to Rs. 1 @ 4% p.a. in three years. Investments were sold at par on 31st March 2017 and debentures are paid off. Pass journal entrie3s and necessary ledger account ignore interest on debentures.
2. The following balances appeared in the books of Assam Steel Industries Ltd. on 1.4.2015
14% Debentures Rs. 10, 00,000.
Sinking Fund Rs. 8, 00,000
12% Sinking Fund Investments – Rs. 8, 00,000. (Representing Sinking Fund: Face value Rs. 8, 60,000)
Annual instalments to be added to Sinking Fund were Rs. 1, 00,000. On 31.3.2016, balance at bank was Rs. 5, 60,000 after the receipt of interest of investments. Investments were sold at 95% and debentures paid off at par 31.3.2011. Give Ledger Accounts for the year ended 31.3.2016.
3. A Ltd has the following balances of accounts on 1.4.2016
10% Debentures – Rs. 1, 00,000
Sinking Fund – Rs. 80,000
10% Sinking Fund Investment (face value Rs. 85,000) – Rs. 80,000
Annual instalments – Rs. 20,000.
Investments are realised at 96% on 31.3.2017 and debentures are redeemed on that day at 5% premium. Cash at bank before interest and sale proceeds of investment was Rs. 60,000. Give the ledger Accounts.

Redemption of Debentures – Out of profit and DRR
1. X Ltd. had Rs. 10, 00,000, 9% debentures due to be redeemed out of profits on 1st October 2016. The company had a Debenture Redemption Reserve of Rs. 4, 14,000. Pass necessary journal entries at the time of redemption.
2. Janata Iron Store Ltd. redeemed Rs. 25, 00,000, 9% debentures at a premium of 5% out of profit on 31.3.2016. Pass necessary journal entries for the redemption of debenture.
3. Assam Iron Stores Pvt. Ltd. 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 ‘Debenture Redemption Reserve Account’ at the time of redemption. Give necessary journal entries for redemption.
4. Pawan Hardware Pvt. Ltd. has 4,000, 8% Debentures of Rs. 100 each due for redemption on 31st March, 2016. There is a balance of Rs. 1, 50,000 in Debenture Redemption Reserve on the date of redemption. Record the necessary entries at the time of redemption of debentures. Here Pawan Hardware Pvt. Ltd is an infrastructure company.
5. Balaji Marvel Ltd. has issued 20,000, 9% Debentures of Rs. 100 each of which half the amount is due for redemption on 31st March 2016. The company has in its Debenture Redemption Reserve Account a balance of Rs. 4, 40,000. Record the necessary entries at the time of redemption of debentures.
6. Lohia Hardware Ltd. had a balance of Rs. 11, 00,000 in its Profit and Loss Account. Instead of declaring dividend it decided to redeem in its Rs. 10, 00,000, 9% debentures at a premium of 10%. Pass necessary journal entries in the books of the company for the redemption of debentures.
7. The company had a balance of Rs. 6, 00,000, 8% debentures. Out of these 25% debentures were redeemed by draw of lots at a premium of 25%.
8. X Ltd. has Rs. 5, 00,000, 10% Debentures outstanding on 1st April 2016. Give journal entries relating to debenture interest for the period ended 31st March, 2016 assuming that the interest is payable annually on 31st March every year. 

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