Ownclasses

X Ltd. redeemed 100, 6% Debentures of Rs. 100 each by converting them into Equity Shares of Rs. 100 each. The 6% Debentures were redeemable at 10% premium for which the Equity Shares were issued at 25% premium. Pass the necessary Journal entries for the redemption of above-mentioned debentures in the books of X Ltd. 

Answer

Journal Entries

Particulars

LF

Debit

Credit

 

6% Debenture a/c                                     Dr

Premium on redemption of debentures a/c   Dr

               To Debenture Holders a/c

(Being amount due to debenture holders)

 

 

 

10000

1000

 

 

 

11000

 

 

 

11000

 

 

 

 

8800

2200

 

Debenture Holders a/c                            Dr

         To Equity share capital a/c

         To Security premium a/c

(Being 88 equity shares @ 100 each issued at 25% premium)

 Working note: Calculation of amount of equity share capital = (11000/125) * 100 = 8800.