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Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company.
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Bihar steel company had issued 10% debenture of RS.100 each , amountin...
Journal Entries for Redemption of Debentures by Purchase in Open Market:
1. Initial Issuance of Debentures:
- Debenture A/c Dr. 100,000
- To Debentureholders A/c 100,000
2. Redemption of Debentures by Purchase in Open Market:
- Debentureholders A/c Dr. 99,000
- To Bank A/c 99,000
3. Redemption of Debentures by Drawing at Par:
- Debentureholders A/c Dr. 5,000
- To Debenture A/c 5,000
4. Profit or Loss on Redemption of Debentures:
- Debentureholders A/c Dr. 1,000
- To Profit and Loss A/c 1,000
Explanation:
The journal entries for the redemption of debentures by purchase in the open market involve the following steps:
1. Initial Issuance of Debentures:
- Bihar Steel Company issued 10% debentures of Rs.100 each, amounting to Rs.100,000.
- The company debits the Debenture A/c and credits the Debentureholders A/c to record the issuance of debentures.
2. Redemption of Debentures by Purchase in Open Market:
- The company decides to redeem 25,000 debentures.
- Out of the 25,000 debentures, 20,000 debentures are purchased in the open market at Rs.99 each.
- The company debits the Debentureholders A/c and credits the Bank A/c to record the redemption of debentures by purchase in the open market.
3. Redemption of Debentures by Drawing at Par:
- The company decides to redeem the remaining 5,000 debentures by drawing at par.
- The company debits the Debentureholders A/c and credits the Debenture A/c to record the redemption of debentures by drawing at par.
4. Profit or Loss on Redemption of Debentures:
- There is a profit or loss on the redemption of debentures if the purchase price is different from the face value.
- In this case, the company incurs a profit of Rs.1,000 on the purchase of debentures.
- The company debits the Debentureholders A/c and credits the Profit and Loss A/c to record the profit on redemption of debentures.
Note: The above journal entries are made in the books of the company to record the redemption of debentures by purchase in the open market and by drawing at par. The entries reflect the transfer of funds from the company to the debentureholders for the redemption of the debentures. Additionally, the profit or loss on redemption is also recorded to account for any difference between the purchase price and face value of the debentures.
1. Initial Issuance of Debentures:
- Debenture A/c Dr. 100,000
- To Debentureholders A/c 100,000
2. Redemption of Debentures by Purchase in Open Market:
- Debentureholders A/c Dr. 99,000
- To Bank A/c 99,000
3. Redemption of Debentures by Drawing at Par:
- Debentureholders A/c Dr. 5,000
- To Debenture A/c 5,000
4. Profit or Loss on Redemption of Debentures:
- Debentureholders A/c Dr. 1,000
- To Profit and Loss A/c 1,000
Explanation:
The journal entries for the redemption of debentures by purchase in the open market involve the following steps:
1. Initial Issuance of Debentures:
- Bihar Steel Company issued 10% debentures of Rs.100 each, amounting to Rs.100,000.
- The company debits the Debenture A/c and credits the Debentureholders A/c to record the issuance of debentures.
2. Redemption of Debentures by Purchase in Open Market:
- The company decides to redeem 25,000 debentures.
- Out of the 25,000 debentures, 20,000 debentures are purchased in the open market at Rs.99 each.
- The company debits the Debentureholders A/c and credits the Bank A/c to record the redemption of debentures by purchase in the open market.
3. Redemption of Debentures by Drawing at Par:
- The company decides to redeem the remaining 5,000 debentures by drawing at par.
- The company debits the Debentureholders A/c and credits the Debenture A/c to record the redemption of debentures by drawing at par.
4. Profit or Loss on Redemption of Debentures:
- There is a profit or loss on the redemption of debentures if the purchase price is different from the face value.
- In this case, the company incurs a profit of Rs.1,000 on the purchase of debentures.
- The company debits the Debentureholders A/c and credits the Profit and Loss A/c to record the profit on redemption of debentures.
Note: The above journal entries are made in the books of the company to record the redemption of debentures by purchase in the open market and by drawing at par. The entries reflect the transfer of funds from the company to the debentureholders for the redemption of the debentures. Additionally, the profit or loss on redemption is also recorded to account for any difference between the purchase price and face value of the debentures.
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Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)?
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Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)?.
Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)?.
Solutions for Bihar steel company had issued 10% debenture of RS.100 each , amounting to 100000 redeemable at the option of the company by drawing at par or by purchase in the open market .it decided to remeed 25000 debenture by purchase of 20000 debentures in the open market at 99 each and by drawing at par 5000 debenture.show the necessary journal entries in the books of company. Related: Redemption of Debenture (Purchase of Own Debenture in Open Market)? in English & in Hindi are available as part of our courses for Commerce.
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