Calculation of Loss on Redemption of Debentures:

Let's calculate the loss on redemption of debentures step by step.

Step 1: Calculation of Redemption Value:
The debentures are issued at a face value of Rs. 10 each and are redeemable after 5 years at a premium of 20%. Therefore, the redemption value of each debenture can be calculated as follows:

Redemption Value = Face Value + Premium
= Rs. 10 + (20% of Rs. 10)
= Rs. 10 + Rs. 2
= Rs. 12

Step 2: Calculation of Total Loss on Redemption:
The total number of debentures issued by Rama Ltd. is 40,000. Therefore, the total loss on redemption can be calculated as follows:

Total Loss on Redemption = (Redemption Value - Face Value) x Total Number of Debentures
= (Rs. 12 - Rs. 10) x 40,000
= Rs. 2 x 40,000
= Rs. 80,000

Step 3: Allocation of Loss on Redemption over the Redemption Period:
The loss on redemption is allocated over the redemption period, which in this case is 5 years. The loss is distributed equally over the years, resulting in an annual loss on redemption. Therefore, the annual loss on redemption can be calculated as follows:

Annual Loss on Redemption = Total Loss on Redemption / Redemption Period
= Rs. 80,000 / 5
= Rs. 16,000

Step 4: Journal Entry for Annual Loss on Redemption:
To record the annual loss on redemption, the following journal entry is passed:

Loss on Redemption A/C Dr. Rs. 16,000
To Debenture Redemption A/C Rs. 16,000

The "Loss on Redemption" account is debited with the annual loss amount, and the "Debenture Redemption" account is credited.

Conclusion:
Therefore, the amount of loss on redemption of debentures to be written off every year will be Rs. 16,000. This loss is allocated over the 5-year redemption period and is recorded through a journal entry each year.

₹16,000 will be written off every year as loss on redemption of debentures.As total loss on issue of debentures is ₹80,000 which when divided by 5 years so it will give you ₹16,000 which is the loss to be written off every year.