On 1st April, 2025, the following balances appeared in the books of Globe Limited (an unlisted company other than AIFI, Banking Company, NBFC and…

CA Foundation · Accounting · RTP · May 2026
On 1st April, 2025, the following balances appeared in the books of Globe Limited (an unlisted company other than AIFI, Banking Company, NBFC and HFC): (i)₹ 75,000 9% Debentures of 100 each issued at par (ii) Balance of Debenture Redemption Reserve (DRR) ₹ 7,50,000. (iii) Debenture Redemption Reserve (DRR) Investment - 7,50,000 represented by 8.75% Secured Bonds of the Government of India of 100 each. Interest on Debentures was paid half-yearly on 30th of September and 31st March every year. The funds required for purchasing the aforesaid debentures were partly raised by selling off the DRR Investment.

Suggested Answer and Working Notes:

In the book of Globe Ltd. 9% Debentures Account Date Particulars ₹ Date Particulars ₹ 31.3.26 To Bank 75,00,000 1.4.25 By Bal b/d 75,00,000 75,00,000 75,00,000 Debenture Redemption Reserve Account Date Particulars ₹ Date Particulars ₹ 31.3.26 To General reserve 7,50,000 1.4.25 By Bal b/d 7,50,000 7,50,000 7,50,000 Debenture Redemption Reserve Investment Account Date Particulars ₹ Date Particulars ₹ 1.4.25 To Bal b/d 7,50,000 31.3.26 By Bank A/c (₹ 75,000 x 100 x 15%) 11,25,000 1.4.25 To Bank A/c 3,75,000 11,25,000 11,25,000 Interest on Debentures Account Date Particulars ₹ Date Particulars ₹ 30.9.25 To Bank A/c (₹ 75,000 x 100 x 9% x 6/12) 3,37,500 31.3.26 By P&L A/c 6,75,000 31.3.26 To Bank A/c (₹ 75,000 x 100 x 9% x 6/12) 3,37,500 6,75,000 6,75,000 Working Note: Additional Investment in Debenture Redemption Reserve Investment DRR Investment required =15% of 75,00,000 = 11,25,000 DRR Investment existing on 1/04/25 = 7,50,000 Additional DRR Investment required = 11,25,000 -7,50,000 = 3,75,000

Topics: Redemption of Debentures

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