Problem in accounting entry of redeeming debentures

Hi Rohit,

What is the difficulty in this problem.. It fairly simple.. Let me explain :

1) You have to discharge 12% debenture of Rs. 1,00,000 at 20% premium by way of 14% debentures issued at 96%. (i.e. 4% discount)

2) so, 100000+ 20% = 1,20,000 /96% = Rs 1,25,000.  This means you issued Rs 1,25,000 debentures to discharge the liability of Rs 1,20,000 debentures.

3) so entry is : 12% debenture in X ltd   - Dr.                       1,20,000

                           Discount on issue of debentures - Dr.            5,000

                                  To 14% Debentures in Y Ltd.                                                 1,25,000

Thanks 

Yash

Ernst and Young

But accoring to the book Answer is Rs. 1,00,000 ...

i.e 12% Debtures     Dr. 1,00,000

                              To 14% Debentures              100,000

Hi Rohit,

I think you are not reading it correctly... Check page 5.24 , 4th Journal entry...

Thanks

Yash

OK So you have Same Book :D

I was asking for Journal Entry in the Books of PRARTHANA Ltd. [ here written as X Ltd. ] ......

Rohit,

In books of Prathana Ltd., the entry would only be with book values as it is getting absorbed by Piyush Ltd.

Evertything will be transfered to realisation account

12% Debentures A/c  -Dr.     1,00,000

          To Realisation A/c                                  1,00,000

Thanks

Yash

OK ...

Thanks for your response

Can You please tell me on [ pg. no. 5.8 ,5.9 & 5.10 ]

Are following answers correct ???

-> Case II     Cash for fraction [ 0.55 * Rs. 100 = 55 ] , It should be 0.55* Rs.55 = 30 because 55(10+45) is market value of share ....

-> Similar problem in Case III , Case IV , Case V , Case XI 

-> In Case XII Market Value should ne Rs.15 and not Rs. 55 ....

-> Similar Problem in Case XIII