Question

B.Ltd., issued 1,000, 12% Debentures of Rs. 100 each on January 1, 2015 at a discount of 5% redeemable at par.

Give Journal entries relating to the issue of debentures and debentures interest for the period ending December 31, 2015 assuming that interest is paid half yearly on June 30 and December 31 and tax deducted at source is 10%. B. Ltd., follows calendar year as its accounting year.

Answer 1

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{Rs.}& \text{Rs.}\\ 2015& & & & & \\ \text{Jan. 1}& \text{Bank A/c}& Dr.& & 95,000& \\ & \text{To 12 \% Debenture Application and Allotment A/c}& & & & 95,000\\ & \underset{–}{\text{(Being debentures issued at a discount of 5 \%)}}& & & & \\ & \text{12 \% Debenture Application and Allotment A/c}& \text{Dr.}& & 95,000& \\ & \text{Discount on Issue of Debenture A/c}& \text{Dr.}& & 5,000& \\ & \text{To 12 \% Debenture A/c}& & & & 1,00,000\\ & \underset{–}{\text{(Being appliction amount transferred to Debenture Account)}}& & & & \\ \text{June 30}& \text{Debenture Interest A/c}& \text{Dr.}& & 6,000& \\ & \text{To Debentureholders A/c}& & & & 5,400\\ & \text{To TDS A/c}& & & & 600\\ & \underset{–}{\text{(Being interest on debenture due and TDS deducted)}}& & & & \\ & \text{Debentureholders A/c}& \text{Dr.}& & 5,400& \\ & \text{TDS A/c}& \text{Dr.}& & 600& \\ & \text{To Bank A/c}& & & & 6,000\\ & \underset{–}{\text{(Being interest paid to debentureholders and TDS paid to government)}}& & & & \\ \text{Dec. 31}& \text{Debenture Interest A/c}& \text{Dr.}& & 6,000& \\ & \text{To Debentureholders A/c}& & & & 5,400\\ & \text{To TDS A/c}& & & & 600\\ & \underset{–}{\text{(Being interest on debenture due and TDS deducted)}}& & & & \\ & \text{Debentureholders A/c}& \text{Dr.}& & 5,400& \\ & \text{TDS A/c}& \text{Dr.}& & 600& \\ & \text{To Bank A/c}& & & & 6,000\\ & \underset{–}{\text{(Being interest paid to debenture holders and TDS paid to government)}}& & & & \\ & \text{Statement of Profit and Loss A/c}& \text{Dr.}& & 12,000& \\ & \text{To Debenture Interest A/c}& & & & 12,000\\ & \text{(Being interest amount transferred to Profit and Loss Account)}& & & & \end{array}$