Question

Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .

Answer 1

Journal In the books of Bright Ltd.
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Mar. 31	Debentures Interest A/c	Dr.		25,000
	To Debenture Holder’s A/c				22,500
	To Income Tax Payable A/c				2,500
	(Debentures interest due)
	Debenture Holder’s A/c	Dr.		22,500
	Income Tax Payable A/c			2,500
	To Bank A/c				25,000
	(Interest on debentures paid)
Mar. 31	Statement of Profit & Loss A/c	Dr.		50,000
	To Debentures Interest A/c				50,000
	(Interest transferred to profit and loss)