Page 4 - LN REDEMPTION OF DEB

Redemption of Debenture by Lump Sum Payment:

Under this method the company redeems the debentures by paying the
whole amount in one lump sum on the maturity or even before maturity if

AOA permits.

Journal Entries on redemption of Debentures:

01. On transfer of Profit to Debenture Redemption Reserve:

Surplus , Balance in statement of Profit & loss a/c Dr.
To Debenture Redemption Reserve A/c

02. On Investment or Making Deposit in the Specified Securities :

Debenture Redemption Investment A/c

To Bank A/c
03. On Encashment of Investment :

Bank a/c dr.

To Debenture Redemption Investment A/c
To Interest Earned A/c

04. On debenture becoming due for Payment

If Debenture are to be redeemed at Par

…% Debenture A/C Dr.
To Debentureholder a/c

ii) If Debenture are to be redeemed at Premium

…% Debenture A/C Dr.

Premium on Redemption of Debenture A/C Dr.
To Debentureholder A/C