Model: Purchase of debenture in open market Kamal Ltd. issued on 1 April 2007, 40,000 12% debenture of Rs.100 each redeemable at the option of the company after the second year as Rs.104 upon giving two months notice to the debenture holders. The company purchased the following debenture in the open market:
- On 12 June 2009, Rs.8,000 nominal value as cum-interest cost Rs.8,050
- On 24 August, 2009 Rs.14,000 nominal value as ex-interest cost Rs.13,830
These debentures were retained as investments till 30 September 2010, on which date they were cancelled. Show the necessary ledger accounts as they would appear in the books of the company for 2009–10 and for 2010–11 assuming that the company closes its book of accounts every on 31 March. Interest is payable half-yearly on 30 September and 31 March. Ignore income tax.