Question

On 1st April, 2015, V.V.L.Ltd issued 1,000, 9% Debentures of ₹ 100 each at a discount of 6%, redeemable at a premium of 10% after three years. Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2016, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2015
Apr. 01	Bank A/c	Dr.		94,000
	To Debenture Application and Allotment A/c				94,000
	(Money received on the issue of debentures)
	Debenture Application and Allotment A/c	Dr.		94,000
	Loss on Issue of Debentures A/c	Dr.		16,000
	To 9% Debentures A/c				1,00,000
	To Premium on Redemption of Debentures A/c				10,000
	(Debenture application and allotment money transferred to Debentures A/c)
Sept 30	Debenture Interest A/c	Dr.		4,500
	To Debenture holders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
	Debenture holders’ A/c	Dr.		4,050
	To Bank A/c				4,050
	(Payment of interest)
	TDS Payable A/c	Dr.		450
	To Bank A/c				450
	(Payment of tax)
2016
Mar 31	Debenture Interest A/c	Dr.		4,500
	To Debenture holders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
	Debenture holders’ A/c	Dr.		4,050
	To Bank A/c				4,050
	(Payment of interest)
	TDS Payable A/c	Dr.		450
	To Bank A/c				450
	(Payment of tax)