Question

On 1.4.2015 PPR Ltd. issued 1500, 10% debentures of Rs 100 each at a discount of 3%, redeemable at a premium of 8% after three years. The company closes its books on 31^st March every year. Interest on 10% debentures is payable on 30^th September and 31^st March. Rate of tax deducted at source is 10%.

Pass necessary journal entries for the issue of 10% debentures and interest for the year ended 31.3.2016

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Apr.01	Bank A/c (1,500 × 97)	Dr.		1,45,500
	To Debenture Application and Allotment A/c				1,45,500
	(Received application money on 1,500 Debenture)
Apr.01	Debenture Application and Allotment A/c	Dr.		1,45,500
	Discount on Issue of Debenture A/c (1,500 × 3)	Dr.		4,500
	Loss on Issue of Debenture A/c (1,500 × 8)	Dr.		12,000
	To 10% Debentures  A/c (1,500 × 100)				1,50,000
	To Premium on Redemption of Debentures A/c (1,500 × 8)				12,000
	(Application money transferred to Debentures A/c)
Sep.30	Debentures Interest A/c	Dr.		7,500
	To  Debentureholders’ A/c				6,750
	To TDS Payable A/c				750
	(Interest due)
Sep.30	Debentureholders’ A/c	Dr.		6,750
	TDS Payable A/c	Dr.		750
	To Bank A/c				7,500
	(Interest paid)
2016
Mar .31	Debenture Interest A/c			7,500
	To  Debentureholders’ A/c				6,750
	To TDS Payable A/c				750
	(Interest due)
Mar.31	Debentureholders’ A/c	Dr.		6,750
	TDS Payable A/c	Dr.		750
	To Bank A/c				7,500
	(Interest paid)
Mar.31	Statement of Profit & Loss A/c	Dr.		15,000
	To Debentures Interest A/c				15,000
	(Interest transferred to P&L)