Question

X Ltd. has 4,000 12% debentures of ₹ 100 each on 1^st April, 2018. According to the terms of issue interest on debentures is payable half yearly on 31^st September and 31^st March and the rate of tax deducted at source is 10%.

Pass necessary journal entries for interest on debentures for the year 2018-19.

Answer 1

Books of X Ltd. Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2018
Sept. 30	Debenture Interest A/c    ...Dr.		24,000	-
	To Debentureholder’s A/c		-	21,600
	To TDS Payable A/c		-	2,400
	(Being due on Debenture Interest)
	Debentureholder’s A/c    ...Dr.		21,600	-
	To TDS Payable A/c		2,400	-
	To Bank A/c		-	24,000
	(Being Interest Paid)
2019
March 31	Debenture Interest A/c    ...Dr.		24,000	-
	To Debentureholder’s A/c		-	21,600
	To TDS Payable A/c		-	2,400
	(Being interest due on debentures)
2019
March 31	Debentureholder’s A/c    ...Dr.		21,600	-
	TDS Payable A/c    ...Dr.		2,400	-
	To Bank A/c		-	24,000
	(Being due interest paid)
March 31	Statement of Profit & Loss A/c    ...Dr.		48,000	-
	To Debenture Interest A/c		-	48,000
	(Being interest transferred to Statement of P & L)