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On 1.4.2015, Mkm Ltd. Issued 12,000, 11% Debentures of `100 Each at a Discount of 8%, Redeemable at a Premium of 10% After Three Years. the Company Closes Its Books on 31st March Every Year. Interest on 11% Debentures is Payable on 30th September and 31st March Every Year. the Rate of Tax Deducted at Source is 10% - CBSE (Arts) Class 12 - Accountancy

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Question

On 1.4.2015, MKM Ltd. issued 12,000, 11% debentures of `100 each at a discount of 8%, redeemable at a premium of 10% after three years. The company closes its books on 31st March every year. Interest on 11% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.

Pass necessary journal entries for the issue of 11% debentures and debenture interest for the year ended 31.3.2016.

Solution

Journal
Date Particulars L.F.

Dr.

Rs

Cr.

Rs

2015

Apr 1

 

 

 

Bank A/c (12,000 × Rs 92)   Dr.

   To Debenture Application and Allotment A/c

(Being received application money on 12,000 Debenture.)

 

11,04,000

 

 

 

11,04,000

Apr 1

Debenture Application and Allotment A/c   Dr.

Discount on Issued of Debentures A/c(12,000 × Rs 8)  Dr.

Loss on Issued of Debentures A/c (12,000 x Rs 10)

   To 11% Debentures A/c (12,000 x Rs 100)

   To Premium on Redemption of Debentures A/c (12,000 x Rs 10)

(Being application money transferred to Debenture Account.)

 

11,04,000

96,000

1,20,000

 

 

 

 

 

 

12,00,000

1,20,000

 

Sep 30

Debenture Interest A/c (1200000 x Rs  11% x 6/12)    Dr.

    To Debentures holder’s A/c

    To TDS Payable A/c

(Being interest due.)

 

66,000

 

 

 

 

59,400

6,600

 

Sep 30

Debentures holder’s A/c     Dr.

TDS Payable A/c    Dr.

    To Bank A/c (1200000 x Rs  11% x 6/12)

(Being interest Paid.)

 

59,400

6,600

 

 

 

 

66,000

 

2016

Mar 31

 

 

Debenture Interest A/c   (1200000 x Rs  11% x 6/12)   Dr.

   To Debentures holder’s A/c

   To TDS Payable A/c

(Being interest due.)

 

66,000

 

 

 

 

59,400

6,600

 

Mar 31

Debentures holder’s A/c   Dr.

TDS Payable A/c

   To Bank A/c  (1200000 x Rs  11% x 6/12)

(Being interest Paid.)

 

59,400

6,600

 

 

 

 

66,000

 

Mar 31

Statement of Profit & Loss A/c     Dr.

   To Bank A/c  (1200000 x Rs  11%)

(Being interest transferred to Profit & Loss Account.)

 

1,32,000

 

 

 

1,32,000

 

  Is there an error in this question or solution?

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Solution On 1.4.2015, Mkm Ltd. Issued 12,000, 11% Debentures of `100 Each at a Discount of 8%, Redeemable at a Premium of 10% After Three Years. the Company Closes Its Books on 31st March Every Year. Interest on 11% Debentures is Payable on 30th September and 31st March Every Year. the Rate of Tax Deducted at Source is 10% Concept: Issue of Debentures at Par at Premium and at Discount.
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