Question

On 1-4-2024, K.K. Ltd. issued 500, 9% Debentures of ₹ 500 each at a discount of 4%, redeemable at a premium of 5% after three years. 

Pass necessary Journal Entries for the year ended 31-3-2025, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
Apr. 1	Bank A/c   ...Dr.		2,40,000	-
	Discount on Issue of Debentures A/c   ...Dr.		10,000
	To 9% Debenture A/c		-	2,50,000
	(Issue of debentures at 4% discount.)
Sep. 30	Interest on Debentures A/c   ...Dr.		11,250	-
	To Bank A/c		-	10,125
	To TDS recoverable A/c		-	1,125
	(Being Interest paid with TDS deduction.)
2025
Mar. 31	Interest on Debentures A/c   ...Dr.		11,250	-
	To Bank A/c		-	10,125
	To TDS recoverable A/c		-	1,125
	(Being Accrued interest for 6 months on 31 March.)
Mar. 31	Statement of Profit & Loss A/c   ...Dr.		22,500	-
	To Debenture Interest A/c		-	22,500
	(Being interest on debenture paid.)
Mar. 31	Statement of Profit & Loss A/c   ...Dr.		22,250	-
	To Loss on Issue of Debentures A/c		-	22,250
	(Being TDS deposited in Government A/c.)