Question

Shyla Ltd., an unlisted manufacturing company, had 30,000, 6% Debentures of ₹ 100 each due for redemption at par on 31^st March 2024. On this date, the company had the required amount in its Debenture Redemption Reserve.
Investment, as required by the law, made on 1st April 2023, earning interest @ 5% per annum, was realised at 97% on the date of redemption and the debentures were redeemed on the due date.
Tax @ 10% on the interest was deducted at the source of the investment.

You are required to prepare the following for the year 2023-24:

1. Debenture Redemption Investment Account.
2. Interest on Debenture Redemption Investment Account.

Answer 1

Dr.	In the books of Shyla Ltd. Debenture Redemption Investment A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
1 April 2023	To Bank A/c	4,50,000	March 31 2024	By Bank A/c	4,36,500
				By P&L A/c (Loss on sale)	13,500
		4,50,000			4,50,000

 

Dr.	Interest on Debenture Redemption Investment A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
31 March 2024	To Statement of P&L	22,500	31 March 2024	By Bank A/c	20,250
				By TDS deposited A/c	2,250
		22,500			22,500