Question

On 1.4.2015, Neena Ltd. issued 800, 9% debentures of Rs 100 each at a discount of 5%, redeemable at a premium of 8% after five years. The company closes its books on 31^st March every year. Interest on 9% debentures is payable on 30^th September and 31^st March. Rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 9% debentures and payment of interest on 9% debentures for the year ended 31^st March, 2016.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Apr.01	Bank A/c (800 × 95)	Dr.		76,000
	To Debenture Application and Allotment A/c				76,000
	(Received application money on 800 Debenture)
Apr.01	Debenture Application and Allotment A/c	Dr.		76,000
	Discount on Issue of Debenture A/c (800 × 5)	Dr.		4,000
	Loss on Issue of Debenture A/c (800 × 8)	Dr.		6,400
	To 9% Debentures  A/c (800 × 100)				80,000
	To Premium on Redemption of Debentures A/c (800 × 10)				6,400
	(Application money transferred to Debentures A/c)
Sep.30	Debentures Interest A/c	Dr.		3,600
	To  Debentureholders’ A/c				3,240
	To TDS Payable A/c				360
	(Interest due)
Sep.30	Debentureholders’ A/c	Dr.		3,240
	TDS Payable A/c	Dr.		360
	To Bank A/c				3,600
	(Interest paid)
2016
Mar .31	Debenture Interest A/c			3,600
	To  Debentureholders’ A/c				3,240
	To TDS Payable A/c				360
	(Interest due)
Mar.31	Debentureholders’ A/c	Dr.		3,240
	TDS Payable A/c	Dr.		360
	To Bank A/c				3,600
	(Interest paid)
Mar.31	Statement of Profit & Loss A/c	Dr.		7,200
	To Debentures Interest A/c				7,200
	(Interest transferred to P&L)