1. (Cancellation of Own Debentures on a subsequent date where Sinking Fund exists).
Continuing Illustration No. 21 if Own Debentures held by the company are cancelled on 31st March, 2011, show the necessary journal entries on cancellation and the effect of the same in the Balance Sheet of the Company.
2. On 1st April, 2010, Green Ltd. issued 2500 12% Debentures of Rs.100 each at Rs.95. Holders of these debentures have an option to convert their holdings into 14% Preference Shares of Rs.100 each at a Premium of Rs.25 per share at any time within three years.
On 31st March, 2011, holders of 500 Debentures notified their intention to exercise the option.
Show the journal entries relating to the issue and conversion of debentures in the books of the company. Also show how the items affected would appear in the company’s balance sheet.