Question

On 1-4-2015 V.V.L. Ltd issued 1000, 9% debentures of Rs 100 each at a discount of 6%, redeemable at a premium of 10% after three years.

Pass necessary journal entries for the issue of debentures and debentures interest for the year ended 31-3-2016, assuming that interest is payable on 30^th September and 31^st March and the rate of tax deducted at source is 10%. The company closes its books on 31^st March every year.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Apr.01	Bank A/c (1,000 × 94)	Dr.		94,000
	To Debenture Application and Allotment A/c				94,000
	(Received application money on 1,000 Debenture)
Apr.01	Debenture Application and Allotment A/c	Dr.		94,000
	Discount on Issue of Debenture A/c (1,000 ×6)	Dr.		6,000
	Loss on Issue of Debenture A/c (1,000 × 10)	Dr.		10,000
	To 9% Debentures  A/c (1,000 × 100)				1,00,000
	To Premium on Redemption of Debentures A/c A/c (1,000 × 10)				10,000
	(Application money transferred to Debentures A/c)
Sep.30	Debentures Interest A/c	Dr.		4,500
	To  Debentureholders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
Sep.30	Debentureholders’ A/c	Dr.		4,050
	TDS Payable A/c	Dr.		450
	To Bank A/c				4,500
	(Interest paid)
2016
Mar .31	Debenture Interest A/c			4,500
	To  Debentureholders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
Mar.31	Debentureholders’ A/c	Dr.		4,050
	TDS Payable A/c	Dr.		450
	To Bank A/c				4,500
	(Interest paid)
Mar.31	Statement of Profit & Loss A/c	Dr.		9,000
	To Debentures Interest A/c				9,000
	(Interest transferred to P&L)