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Record Necessary Journal Entries Assuming that Income Tax is Deducted at 30% of the Amount of Interest. - Book Keeping and Accountancy

Journal Entry

Dinesh Ltd. Issued 10,00,000 6% Debentures on 1st April, 2010. Interest is paid on 30 sept., 2010 and 31st March, 2011.
Record necessary journal entries assuming that income tax is deducted at 30% of the amount of interest.

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Solution

                                    Books of Dinesh Ltd.
                                         Journal Entry

Date Particulars L.F. Debit Amount (Rs.)  Credit Amount (Rs.)
2010
Apr.01
Bank A/c                               Dr.
 To Debenture Application and Allotment A/c
(Debenture application and Allotment received on 10,000 6% Debentures of Rs 100 each) 
  10,00,000 10,00,000
Apr.01 Debenture Application and Allotment A/c                Dr.
 To 6% Debentures A/c
(Debenture application and allotment transferred to 6% Debenture A/c)
  10,00,000 10,00,000
Sept.30 Debenture Interest A/c    Dr.
 To Income Tax Payable A/c
 To Debentureholders A/c
(Amount of interest due on debenture and TDS
  30,000 9,000
21,000
Sept.30

Debentureholders A/c      Dr
   To Bank A/c
(Interest paid to Debenture holder)

  21,000 21,000
2011
Mar.31

Debenture Interest A/c          Dr.
  To Income Tax Payable A/c
  To Debentureholders A/c
(Amount due on Debenture and TDS)

  30,000 9,000
21,000
Mar.31 Debentureholders A/c     Dr.
     To Bank A/c
(Interest paid to Debenture Holder)
  21,000 21,000
Mar.31 Income Tax Payable A/c   Dr.
     To Bank A/c 
(Income Tax paid)
  18,000 18,000
Mar.31

Profit and Loss A/c             Dr.
    To Debenture Interest A/c
(Interest on Debenture transferred to Profit and Loss A/c)

  60,000 60,000
Concept: Interest on Debentures
  Is there an error in this question or solution?
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 11 Company Accounts Part - 2 (Accounting for Debentures)
Exercise | Q 5 | Page 374
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