2.4.4 - Journal Entries for Redemption
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Practice Questions
Test your understanding with targeted questions
What is the purpose of Debenture Redemption Reserve (DRR)?
💡 Hint: Think about why companies need to prepare for repayment.
Define what a debenture is.
💡 Hint: Consider debentures as similar to bonds.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does DRR stand for?
💡 Hint: Think about the reserve's function.
True or False: The premium is an additional charge incurred when redeeming debentures.
💡 Hint: What happens when you pay more than the face value?
1 more question available
Challenge Problems
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A company redeems ₹2,00,000 of 10% debentures at a premium of 5%. Prepare the journal entries for the redemption.
💡 Hint: Identify total amounts and whether to add the premium in your entries.
Discuss the potential impact on the company’s financial health if DRR is not maintained before redemption.
💡 Hint: Consider what financial stability means for businesses.
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