Question

Universe Ltd. Has 2,00,000, 9% debentures of Rs.50 each due for redemption in five equal annual instalments starting from March 31, 2015. Debentures Redemption Reserve has a balance of Rs.17,00,000. Record necessary journal entries.

Answer 1

Amount transferred to Debenture Redemption Reserve Rs.8,00,000 on 31st March, 2014. Investment made for Rs.3,00,000 on 30th April, 2014 and encashed on 31st March, 2019. One-fifth of DRR will be transferred to General Reserve each time on redemption of one-fifth debentures.