Read the following information and answer the questions:
On 1st April 2013, a company made an issue of 10,000, 9% debentures of ₹100 each at ₹92 per debenture. The terms of issue provided for redemption of 2,000 debentures every year starting from 31st March 2016, either by conversion into equity shares of ₹20 each or by draw of lot at par at the company's option. On 31st March 2016, the company redeemed 2,000, 9% debentures by converting them into equity shares of ₹20 each.
Company redeemed 2,000 debentures by draw of lot on 31st March 2017. Account to be debited on this date for the payment of due amount :-
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Debenture holder’s A/c
When debentures are redeemed in instalments, the debentures to be redeemed are chosen by draw of lots. Two entries are passed on 31st March 2017:
9% Debentures A/c Dr. ₹2,00,000 — To Debentureholders A/c ₹2,00,000 (amount due on redemption at par)
Debentureholders A/c Dr. ₹2,00,000 — To Bank A/c ₹2,00,000 (payment of the amount due)
The payment of the due amount debits the Debentureholders’ Account.
NCERT (2026-27 edition):
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