Question

On 1^st April, 2017, Gabriel Ltd., a listed company, issued 3,000, 8% Debentures of ₹ 100 each. One-third of the Debentures were redeemed at par on 31^st March, 2021 and the remaining two-third on 31^st March, 2022. The company paid interest on debentures annually on 31^st March.

After meeting the requirements of the Companies Act, 2013, regarding Debenture Redemption Investment, the company redeemed the debentures.

You are required to record necessary journal entries in the books of the company only on 31st March, 2022; including entries for interest on debentures.

Answer 1

Journal Entries
Date	Particulars	Dr. (₹)	Cr. (₹)
2022
March 31	Interest on Debentures A/c     ...Dr. `(2,000 xx 100 xx 8/100)`	16,000
	To Debentureholders A/c		16,000
	(Interest due on Debentures)
March 31	Debentureholders A/c    ...Dr.	16,000
	To Bank A/c		16,000
	(Interest on debentures paid)
March 31	Bank A/c    ...Dr.	30,000
	To Debenture Redemption Investment A/c		30,000
	(Investments encashed)
March 31	8% Debentures A/c    ...Dr.	2,00,000
	To Debentureholders A/c		2,00,000
	(Amount payable to debentureholders made due)
March 31	Debentureholders A/c   ...Dr.	2,00,000
	To Bank A/c		2,00,000
	(Payment made to debentureholders)
March 31	Statement of Profit and loss A/c     ...Dr.	16,000
	To Interest on Debentures A/c		16,000
	(Interest paid on debentures transferred to Statement of Profit and Loss)

Note: A listed company is not required to make Debenture Redemption Reserve A/c (DRR). Thus, no entry for DRR will be made.