On 1st November, 2013 S Ltd. issued 10,000, 8% Debentures of ₹100 each. These debentures were redeemable at 20% premium on 31st October, 2018 by the way of either converting into 8% Preference Shares of ₹100 each at 30%

(i) Nominal Value of Preference Shares issued: Redeemable Price of Debenture = Face Value + Premium = ₹100 + (20% of ₹100) = ₹120 Preference Shares Price (with Premium) = Face Value + Premium = ₹100 + (30% of ₹100) = ₹130 Nominal Value of Preference Shares issued = (No. of Debentures * Redeemable Price of Debenture / Preference Shares Price (with Premium)) * ₹100 = (7,865 * ₹120 / ₹130) * ₹100 = ₹7,26,000 (ii) Journal Entries Date Particulars L.F. Amount (Dr.) ₹ Amount (Cr.) ₹ 8% Debenture A/c Dr. 10,00,000 Premium on Redemption of Debenture A/c Dr. 2,00,000 To Debenture Holder A/c 12,00,000 (Being amount due on redemption of 8% Debenture @20% premium) Debenture Holder A/c Dr. 9,43,800 To 8% Preference Share Capital A/c 7,26,000 To Securities Premium A/c 2,17,800 (Being 8% Preference shares issued at 30% premium to debenture holders of 7865, 8% debentures) Debenture Holder A/c Dr. 2,56,200 To Bank A/c 2,56,200 (Being cash paid to debenture holders of 2135, 8% Debentures) Securities Premium A/c Dr. 2,00,000 To Premium on Redemption of Pref. Shares A/c 2,00,000 (Being Premium on Redemption of Pref. Shares written off against Securities Premium)