On 1st April, 2014 Kapil Ltd. had made an issue of 2,000, 6% debentures of ₹100 each. The Company during the year 2015-16 purchased for cancellation 500 of these debentures. The company paid ₹95 per debenture for 400 deb

In the books of Kapil Ltd. Journal Entries Particulars Amt. (Dr.) Amt. (Cr.) 1. Own Debentures A/c (400 × 95 + 100 × 98 + 200) Dr. 48,000 To Bank A/c 48,000 (Being own debenture purchased) 2. 6% Debentures A/c (500 × 100) Dr. 50,000 To Own Debentures A/c 48,000 To Profit on cancellation of own Debentures A/c 2,000 (Being Cancellation of Own Debentures) 3. Profit on Cancellation of Own Debentures A/c Dr. 2,000 To Capital Reserves A/c 2,000 (Being profit on cancellation transferred to Capital reserves account)