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Question
Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .
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Solution
Journal
In the books of Bright Ltd.
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
2016 |
|
|
|
|
|
|
Mar. 31 |
Debentures Interest A/c |
Dr. |
|
25,000 |
|
|
|
To Debenture Holder’s A/c |
|
|
|
22,500 |
|
|
To Income Tax Payable A/c |
|
|
|
2,500 |
|
|
(Debentures interest due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Holder’s A/c |
Dr. |
|
22,500 |
|
|
|
Income Tax Payable A/c |
|
|
2,500 |
|
|
|
To Bank A/c |
|
|
|
25,000 |
|
|
(Interest on debentures paid) |
|
|
|
|
|
|
|
|
|
|
|
|
Mar. 31 |
Statement of Profit & Loss A/c |
Dr. |
|
50,000 |
|
|
|
To Debentures Interest A/c |
|
|
|
50,000 |
|
|
(Interest transferred to profit and loss) |
|
|
|
|
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