Question

Jay Kay Ltd. an ‘other listed company’ issued 60,000 12% debentures of Rs. 100 each at par redeemable at the end of 5 years at a premium of 20%. On this date, a balance of Rs. 5,00,000 in the securities premium reserve account. The company created the required amount of debenture redemption reserve in 3 equal instalments on March 31, 2017, 2018 and 2019. It invested in specified securities (DRI) the required amount on April, 01 of the financial year Debentures were duly redeemed on the record necessary journal entries for:

1. Issue of debentures
2. Writing off loss on issue of debentures.
3. Interest and debentures for 2015-16 assuring if are paid annually & tax deducted at service is 10%.
4. Regarding redemption of debentures.

Answer 1

In the books of Jay kay limited
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c    ...Dr.		60,00,000
	To Debenture application and allotment A/c			60,00,000
	(Being debenture money received)
2.	Debenture application A/c   ...Dr.		60,00,000
	Loss on issue on debenture A/c		12,00,000
	To 12% Debenture A/c			60,00,000
	To Premium on redemption A/c			12,00,000
	(Being amount transfer to Debenture A/c)
3.	Securities premium A/c   ...Dr.		5,00,000
	Statement of Profit and Loss A/c		7,00,000
	To Loss on issue of debenture A/c			12,00,000
	(Being loss charged to securities premium and statement of profit and loss)
4.	Debenture Interest A/c   ...Dr.		7,20,000
	To Debenture holder A/c			6,48,000
	To Tax deducted at Source			72,000
	(Being Debenture interest due)
5.	Tax deducted at Source A/c    ...Dr.		72,000
	To Bank A/c			72,000
	(Being T.D.S. deposited)
6.	Debenture holder A/c   ...Dr.		6,48,000
	To Bank A/c			6,48,000
	(Being net interest paid to holder)
7.	12% Debenture A/c   ...Dr.		60,00,000
	Premium on redemption A/c ...Dr.		12,00,000
	To Debenture holder A/c			72,00,000
	(Being amount paid to debenture holder)
8.	Debenture holder A/c   ...Dr.		72,00,000
	To Bank A/c			72,00,000
	(Being amount paid to debenture holder)