(When Debentures are redeemed out of the proceeds of fresh issue of shares or debentures).
The following is the Balance Sheet of Good Luck Ltd. as on 1st April, 2011
|
Liabilities |
Rs |
Assets |
Rs |
|
Share Capital: |
|
Fixed Assets: |
|
|
Authorised Capital: |
|
Land and Building |
2,00,000 |
|
1,00,000 Equity Shares |
|
Plant and Machinery |
2,00,000 |
|
of 10 each |
10,00,000 |
Furniture and Fixtures |
10,000 |
|
50,000 Equity shares of |
|
Current Assets, Loans |
|
|
10 each fully paid up |
5,00,000 |
and Advances: |
|
|
Reserves and Surplus: |
|
A. Current Assets |
|
|
Profit & Loss A/c |
50,000 |
Stock in Trade |
1,70,000 |
|
Secured Loans: |
|
Sundry Debtors |
2,00,000 |
|
1,000 12% Debentures of |
|
Cash at Bank |
20,000 |
|
100 each fully paid up |
1,00,000 |
B. Loans and Advances |
Nil |
|
Current Liabilities and Provisions: |
|
|
|
|
A. Current Liabilities |
|
|
|
|
Creditors |
1,50,000 |
|
|
|
B. Provisions |
Nil |
|
|
|
|
8,00,000 |
|
8,00,000 |
The Debenture Trust Deed provides that the company may redeem the debentures at a premium of 5% at any time before the maturity. In order to exercise this option, the directors decided to issue 10,000 equity shares of 10 each at 11 on this day and to redeem the debentures. All the shares were duly subscribed and the debentures were redeemed.
Show the journal entries in the books of the company. Also prepare the Balance Sheet after the redemption of debentures.