ABC Ltd. had ₹10,00,000, 6% Debentures of ₹100 each as on 31st March, 2015. The company purchased in the open market following debentures for immediate cancellation : On 01-07-2015 — 1,000 Debentures @ ₹97/(cum-interest)

In the books of ABC Ltd. Journal Entries Date Particulars Amt. (Dr.) Amt. (Cr.) 01.07.2015 Own Debentures A/c Dr. 95,500 Debentures Interest A/c [1000 × 100 × 6% × (3/12)] Dr. 1,500 To Bank A/c 97,000 (Being 1000 6% Debentures purchased @ ₹97 cum Interest for immediate cancellation) 01.07.2015 6% Debentures A/c Dr. 1,00,000 To Own Debentures A/c 95,500 To Capital Reserve A/c 4,500 (Profit on Cancellation of debentures) (Being 1000 6% Debentures cancelled and profit thereon transferred to capital reserve account) 30.09.2015 Debentures Interest A/c [9000 × 100 × 6% × (6/12)] Dr. 27,000 To Debentures holders A/c 27,000 (Being interest accrued on 9000 6% debenture for 6 months credited to debenture holders) 30.09.2015 Debentures holders A/c Dr. 27,000 To Bank A/c 27,000 (Being the interest on 6% debenture amount paid) 29.02.2016 Own Debentures A/c Dr. 1,78,200 Debentures Interest A/c [1800 × 100 × 6% × (5/12)] Dr. 4,500 To Bank A/c 1,82,700 (Purchase of 1800 own 6% Debenture @ ₹99 ex interest for immediate cancellation and accrued interest thereon paid to the selling debenture holders) 29.02.2016 6% Debentures A/c Dr. 1,80,000 To own Debentures A/c 1,78,200 To Capital reserve A/c 1,800 (Profit on 1,800 cancellation on debenture) (Being 1800 own 6% debenture cancelled and profit thereon transferred to capital reserve account) 31.03.2016 Debenture interest A/c [7200 × 100 × 6% × (1/2)] Dr. 21,600 To Debenture holders A/c 21,600 (Being the six monthly interest accrued on the remaining 7200 6% Debentures credited to debenture holders) 31.03.2016 Debentures holders A/c Dr. 21,600 To Bank A/c 21,600 (Being the interest on debentures paid) 31.03.2016 Profit and Loss A/c Dr. 54,600 To Debentures interest A/c 54,600 (Being interest on 6% debentures for the year charged to profit and loss account at the end of year)