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Question -

B. Ltd. issued 1,000, 12% debentures of ₹ 100 each on April 01, 2014 at a discount of 5% redeemable at a premium of 10%.
Give journal entries relating to the issue of debentures and debentures interest for the period ending March 31, 2015 assuming that interest is paid half yearly on September 30 and March 31 and tax deducted at source is 10%.



Answer -

Date

Particulars

L.F.

Debit

Amount

₹

Credit

Amount ₹

2014

Apr. 01

Bank A/c

Dr.

95,000

Loss on Issue on Debentures A/c

Dr.

15,000

To 12% Debenture A/c

1,00,000

To Premium on Redemption of Debentures A/c

10,000

(Debenture issued at discount and redeemable at Premium)

Sept. 30

Debenture Interest A/c

Dr.

6,000

To Income Tax Payable A/c

600

To Debenture Holders A/c

5,400

(Amount of interest on 12% debentures ₹ 1,00,000 due for

6 months and 10% tax deducted at source)

Sept. 30

Debenture Holders A/c

Dr.

5,400

To Bank A/c

5,400

(Interest paid to Debenture Holders)

2015

Mar. 31

Debenture Interest A/c

Dr.

6,000

To Income Tax Payable A/c

600

To Debenture Holders A/c

5,400

(Amount of interest on 12% Debentures ₹ 1,00,000 due for

6 months and 10% tax deducted at source)

Mar. 31

Debenture Holders A/c

Dr.

5,400

To Bank A/c

5,400

(Interest paid to Debenture Holders)

Mar. 31

Profit and Loss A/c

Dr.

12,000

To Debenture Interest A/c

12,000

(Interest on debentures transferred to Profit and Loss Account)

 

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