Question

Pawan Hans Ltd. issued on 1st July, 2025, 10,000, 7% Debentures of ₹ 100 each for subscription at 10% premium payable ₹ 40 on application and balance on allotment. The debentures were subscribed and due amounts were received. Interest was payable on 31st March each year.

Pass the Journal entry for issue of debentures and interest for the year ended 31st March, 2026 and transfer the interest to Statement of Profit & Loss.

Answer 1

Journal Entries in the Books of Pawan Hans Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2025 July 1	Bank A/c   ...Dr.		4,00,000
	To Debenture Application A/c			4,00,000
	(Being application money received on 10,000 debentures @ ₹ 40 each)
2025 July 1	Debenture Application A/c   ...Dr.		4,00,000
	To 7% Debentures A/c			4,00,000
	(Being application money transferred to Debentures A/c)
2025 July 1	Debenture Allotment A/c   ...Dr.		7,00,000
	To 7% Debentures A/c			6,00,000
	To Securities Premium A/c			1,00,000
	(Being allotment money due, including premium of ₹ 10 per debenture)
2025 July 1	Bank A/c   ...Dr.		7,00,000
	To Debenture Allotment A/c			7,00,000
	(Being allotment money received)
2026 March 31	Debenture Interest A/c   ...Dr.		52,500
	To Debentureholders A/c			52,500
	(Being interest due on ₹ 10,00,000 @ 7% p.a. for 9 months)
2026 March 31	Debentureholders A/c   ...Dr.		52,500
	To Bank A/c			52,500
	(Being debenture interest paid)
2026 March 31	Statement of Profit & Loss A/c   ...Dr.		52,500
	To Debenture Interest A/c			52,500
	(Being debenture interest transferred to Statement of Profit & Loss)

Working note:

Interest on Debentures

= ₹ 10,00,000 × 7% × `9/12`

= ₹ 52,500