Question

Agam Ltd. issued 40,000; 9% Debentures of ₹ 100 each on 1st April, 2025 at a discount of 10% redeemable at a premium of 10%.

Interest was paid half yearly on 30th September and 31st March, give Journal entries for debenture interest for the half year ended 31st March, 2026.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
31 March 2026	Debenture Interest A/c   ...Dr.		1,80,000
	To Bank A/c			1,80,000
	(Being half-yearly interest on 9% Debentures paid)
31 March 2026	Statement of Profit and Loss A/c   ...Dr.		1,80,000
	To Debenture Interest A/c			1,80,000
	(Being debenture interest transferred to Statement of Profit and Loss)

Working Note:

Face Value of Debentures:

40,000 × ₹ 100 = ₹ 40,00,000

Annual Interest on Debentures:

₹ 40,00,000 × 9% = ₹ 3,60,000

Interest for Half-Year ended 31st March, 2026:

₹ 3,60,000 × `6/12` = ₹ 1,80,000