Question

On 1st April, 2022, Resorts Ltd. (a listed construction company) had 60,000, 5% Debentures of ₹100 each due for redemption at par on 31st March, 2023.
As per the law, investment was made in a fixed deposit of a bank on 30th April, 2022, earning interest @5% per annum.
Tax @10% was deducted by the bank on the interest.

You are required to pass necessary journal entries in the year of redemption of debentures, including entries for interest on Debenture Redemption Investment. (Ignore the interest on Debentures)

Answer 1

Journal of Resorts Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2022
30 April	Debenture Redemption Investment A/c   ...Dr.		9,00,000	-
	To Bank A/c		-	9,00,000
	(Investment made in a fixed deposit @ 15% on ₹60 00 000)
2023
31 March	Bank A/c   ...Dr.		37,125	-
	TDS Collected (Receivables) A/c   ...Dr.		4,125	-
	To Interest on DRl A/c		-	41,250
	(Interest received on DRl for 11 months)
31 March	5% Debentures A/c   ...Dr.		60,00,000	-
	To Debentureholder’s A/c		-	60,00,000
	(Amount due to debentureholders)
31 March	Debentureholder’s A/c   ...Dr.		60,00,000	-
	To Bank A/c		-	60,00,000
	(Payment of amount due to debentureholders)
31 March	Interest on DRI A/c   ...Dr.		41,250	-
	To Statement of Profit and Loss		-	41,250
	(Interest transferred to Statement of Profit and Loss)