Puva Ltd. has issued 15,000, 10% Debentures of ₹100 each on 1st April, 2014. During the year 2018-19 the following transactions were executed in respect of the debentures: — On 1st July, 2018, 3,500 own debentures were p

Journal Entries in the books of Puva Ltd. Date Particulars L.F. Debit (₹) Credit (₹) 1.7.18 10% Debentures A/c Dr. 3,50,000 Interest on Debentures A/c Dr. 8,750 To Bank A/c 3,41,250 To Profit on Redemption of Debentures A/c 17,500 (Being 3500 Debentures redeemed by purchase from open market at ₹95 ex-interest) 1.7.18 Profit on Redemption of Debentures A/c Dr. 17,500 To General Reserve A/c 17,500 (Being Balance transferred) 30.9.18 Interest on Debentures A/c Dr. 57,500 To Bank A/c 57,500 (Being Half yearly interest paid) 31.10.18 Own Debentures A/c Dr. 2,30,800 Interest on Debentures A/c Dr. 2,000 To Bank A/c 2,32,800 (Being own Debentures purchased from open market at ₹97 cum-interest) 31.12.18 Bank A/c Dr. 1,04,000 To Own Debentures A/c 1,01,500 To Interest on Debentures A/c 2,500 (Being 1000 Own Debentures sold at ₹104 cum interest) 31.12.18 Own Debentures A/c Dr. 5,333 To Profit on re-sale of own debentures A/c 5,333 (Being profit on re-sale) 31.3.19 Interest on Debentures A/c Dr. 52,500 To Bank A/c 45,500 To Interest on Own Debentures A/c 7,000 (Being Half yearly interest paid) 31.3.19 Profit on re-sale of own debentures A/c Dr. 5,333 To Profit and Loss A/c 5,333 (Being Profit on re-sale of own debentures transferred) 31.3.19 Profit and Loss A/c Dr. 1,18,250 To Interest on Debentures A/c 1,18,250 (Being Balance transferred) 31.3.19 Interest on Own Debentures A/c Dr. 7,000 To Statement of Profit and Loss A/c 7,000 (Being Balance Transferred) Working Notes On 1.7.2018 Profit on Purchase of Deb. from open market = (3500 × 100) - (3500 × 95) = ₹17,500 Interest on Deb. up to 1.7.18 = 3,50,000 × 10% × 3/12 = ₹8,750 Interest payable on 30.9.2018 = 15,000 - 3,500 = 11,500 × 100 × 10% × 6/12 = ₹57,500 On 31.10.2018 Cost of Own Debenture = (2400 × 97) - interest (24,000 × 10% × 1/12) = ₹2,32,800 - ₹2,000 = ₹2,30,800 On 31.12.2018 Net sale price = 1000 × 104 - Interest (1,00,000 × 10% × 3/12) = ₹1,04,000 - ₹2,500 = ₹1,01,500 Profit on sale of Own Debentures = Net sale value - cost of 1000 Own Debentures = ₹1,01,500 - (2,30,800 × 1000/2400) = ₹1,01,500 - ₹96,167 = ₹5,333 Interest payable on 31.3.2019 = 11,500 - 1,000 = 10,500 × 100 × 10% × 6/12 = ₹52,500 out of which interest on 1400 Own Debentures ₹7,000, hence, net amount paid in cash = ₹45,500