When all debentures are redeemed, balance in the Debenture Redemption Reserve is transferred to which account?

General Reserve

The correct answer is option 2- General Reserve.

Debenture Redemption Reserve is shown on the Equity and Liabilities part of the Balance Sheet under the head 'Shareholders' Funds' and sub-head 'Reserves and  Surplus'. On redemption of debentures, the amount proportionate to the debentures redeemed shall be transferred from Debenture Redemption Reserve (DRR) to General Reserve. For example, if the amount of outstanding debentures is 20,00,000 and there is a DRR of ₹2,00,000, then if 40% i.e., 8,00,000 debentures are redeemed, 40% of 2,00,000 i.e., 80,000 shall be transferred to General Reserve. The following journal entry is passed for this-
Debenture Redemption Reserve A/c ...Dr.
    To General Reserve A/c