Question

Y Ltd. issued 1,000 debentures of Rs 100 each at par, redeemable at a premium of 10 percent. Pass journal entries for issue and redemption.

Hint:

At redemption, premium is debited to 'Premium on Redemption of Debentures' A/c. Always credit Debentureholders before paying cash.

Answer 1

1. On Issue of Debentures at Par

\[ \text{Bank A/c} \quad \text{Dr.} \quad \text{Rs }1,00,000 \\ \quad \quad \text{To Debentures A/c} \quad \text{Rs }1,00,000 \]

2. On Redemption at Premium

\[ \text{Debentures A/c} \quad \text{Dr.} \quad \text{Rs }1,00,000 \\ \text{Premium on Redemption A/c} \quad \text{Dr.} \quad \text{Rs }10,000 \\ \quad \quad \text{To Debentureholders A/c} \quad \text{Rs }1,10,000 \]

3. On Payment to Debentureholders

\[ \text{Debentureholders A/c} \quad \text{Dr.} \quad \text{Rs }1,10,000 \\ \quad \quad \text{To Bank A/c} \quad \text{Rs }1,10,000 \]

Final Answer:

\[ \boxed{\text{Debentures issued at par, redeemed at 10\% premium}} \]