Practicing Success
If all the debentures are redeemed, the balance in the debenture redemption fund account is transferred to: |
Capital reserve Statement of profit and loss Capital redemption reserve General reserve |
General reserve |
When all the debentures are redeemed, the balance in the debenture redemption fund account is transferred to the general reserve account. The debenture redemption fund account is a special account that is created to hold the funds that are used to redeem debentures. Debentures are a type of debt that is issued by a company to raise money. When a debenture matures, the company is required to repay the principal amount to the bondholders. The general reserve account is a general-purpose account that can be used for any purpose, such as financing new projects, expanding the business, or paying off debt. When the debenture redemption fund account is transferred to the general reserve account, the company has the flexibility to use the funds for any purpose that it sees fit. |