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.
Answers
Solution On 1-4-2015 V.V.L. Ltd Issued 1000, 9% Debentures of Rs 100 Each at a Discount of 6%, Redeemable at a Premium of 10% After Three Years. Concept: Issue of Debentures at Par at Premium and at Discount.
HOPE THIS HELPS
FOLLOW ME
Solution:
Journal
Date Particulars Debit Rs. Credit Rs.
2015
Apr. 01 Bank A/c Dr. 94,000
To Debenture Application and Allotment A/c 94,000
(1,000, 9% Debentures issued at a discount of 6%)
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
(1,000, 9% Debentures issued at a discount of 6%, redeemable at a premium of 10%)
Sept 30 Debenture Interest A/c Dr. 4,500
To Debenture holders' A/c 4,050
To TDS Payable A/c 450
(Interest on debentures due)
Debenture holders' A/c Dr. 4,050
To Bank A/c 1,050
(Payment of interest to debenture holders')
TDS Payable A/c Dr. 450
To Bank A/c 450
(Payment of tax to government)
2016
Mar 31 Debenture Interest Dr. 4500
To Debenture holders' A/c 4,050
To TDS Payable A/c 450
(Interest on debentures due)
Debenture holders' A/c Dr. 1,050
To Bank A/c 1,050
(Payment of interest to debenture holders')
TDS Payable A/c Dr. 450
To Bank A/c 450
(Payment of tax to government)