Question

On 1.4.2015, J.K. Ltd. issued 8,000, $9\%$ debentures of Rs 1,000 each at a discount of $6\%$, redeemable at a premium of $5\%$ after three years. The company closes its books on 31st March every year. Interest on $9\%$ debentures is payable on 30th september and 31st March every year. The rate of tax deducted at source is $10\%$.

Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31.3.2016.

Answer 1

JOURNAL OF JK LTD.

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ 2015& & & & & \\ \text{April 1}& \text{Bank A/c}& \text{Dr}& & 75,20,000& \\ & \text{To Debenture Application and Allotment A/c}& & & & 75,20,000\\ & \text{(Amount received on application)}& & & & \\ \text{April 1}& \text{Debenture Application and Allotment A/c}& \text{Dr}& & 75,20,000& \\ & \text{Loss on Issue of Debenture A/c}& \text{Dr}& & 8,80,000& \\ & \text{To}9\%\text{Debenture A/c}& & & & 80,00,000\\ & \text{To Premium on Redemption of Debentures A/c}& & & & 4,00,000\\ & \text{(Issue of Debentures at}6\%\text{discount and redemable}& & & & \\ & \text{at}5\%\text{premium})& & & & \\ \text{Sept 30}& \text{Interest on Debenture A/c}& \text{Dr}& & 3,60,000& \\ & \text{To Debentureholders A/c}& & & & 3,24,000\\ & \text{To TDS Payable A/c}& & & & 36,000\\ & \text{(Half- yearly interest due to debentures and tax}& & & & \\ & \text{deducted at source)}& & & & \\ \text{Sept 30}& \text{Debentureholders A/c}& \text{Dr}& & 3,24,000& \\ & \text{To Bank A/c}& & & & 3,24,000\\ & \text{(Payment of interest)}& & & & \\ \text{Sept 30}& \text{TDS Payable A/c}& \text{Dr}& & 36,000& \\ & \text{To Bank A/c}& & & & 36,000\\ & \text{(TDS deposited in Government Account)}& & & & \\ 2016& & & & & \\ \text{March 31}& \text{Interest on Debentures A/c}& \text{Dr}& & 3,60,000& \\ & \text{To Debenture A/c}& & & & 3,24,000\\ & \text{To TDS Payable A/c}& & & & 36,000\\ & \text{(Half- yearly interest due to debentures and tax)}& & & & \\ & \text{deducted at source)}& & & & \\ \text{March 31}& \text{Debentureholders A/c}& \text{Dr}& & 3,24,000& \\ & \text{To Bank A/c}& & & & 3,24,000\\ & \text{(Payment of interest)}& & & & \\ \text{March 31}& \text{TDS Payable A/c}& \text{Dr}& & 36,000& \\ & \text{To Bank A/c}& & & & 36,000\\ & \text{(TDS deposited in Government Account)}& & & & \\ \text{March 31}& \text{Statement of Profit and Loss}& \text{Dr}& & 7,20,000& \\ & \text{To Interest on Debenture A/c}& & & & 7,20,000\\ & (Rs3,60,000+Rs3,60,000)& & & & \\ & \text{(Interest transferred to Statement o Profit and Loss)}& & & & \end{array}$