Question

On 1^st April, 2016, Krayon Ltd. issued 8,000. 12% Debentures of Rs. 100 each, redeemable at par after 5 years.
The issue was fully subscribed.
According to the terms of issue, interest on debentures is payable annually on 31st March. Tax deducted at
source is 20%.
You are required to pass journal entries for the year 2016-17, regarding issue of debentures and interest on
debentures.

Answer 1

                                Journal Krayon Ltd.

Date	Particulars	L.F.	Amount Rs.	Amount Rs.
1/4/2016	Bank A/c ......Dr  To Debenture Application and Allotment A/c  (Being Deb. Application and allotment received)		8,00,000	8,00,000
	Debentures Application and allotment A/c....... Dr To 12% Debentures A/c  (Being debentures issued)		8,00,000	8,00,000
31/3/2017	Debenture interest A/c...... Dr   To Debenture holder's A/c  To TDS  (Being interest due to Debentures holders)		96,000	76,800 19,200
31/3/2017	Debentures Holders A/c....... Dr  TDS .......Dr  To Bank A/c (Being interest and TDS paid)		76,800 19,200	96,000
	OR Debenture holder .......Dr To Bank (Being debenture interest paid)		76,800	76,800
	TDS ....... Dr  To Bank A/c  (Being TDS paid)		19,200	19,200
31/3/2017	Statement of P/L ......Dr  To Debenture Interest (Being Debenture interest written off)		96,000	96,000