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Question
Agam Ltd. issued 40,000 9% debentures of ₹ 100 each on April 1, 2018, at a discount of 10%, redeemable at a premium of 10%. Assuming that the interest was paid half-yearly on September 30 and March 31 and the tax deducted at source was 10%, give journal entries relating to debenture interest for the half-year ended March 31, 2019.
Solution
In the books of Agam Ltd.
Journal
| Date | Particulars | L.F. |
Debit
Amount(₹)
|
Credit
Amount(₹)
|
|
| 2018 Apr.01 |
Bank A/c | Dr. |
36,00,000
|
|
|
| To Debenture Application and Allotment A/c |
|
36,00,000
|
|||
| (Received application money on 8,000 Debenture) |
|
|
|||
|
|
|
||||
| Apr.01 | Debenture Application and Allotment A/c | Dr. |
36,00,000
|
|
|
| Discount on Issue of Debenture A/c | Dr. |
4,00,000
|
|
||
| Loss on Issue of Debenture A/c | Dr. |
4,00,000
|
|
||
| To 9% Debentures A/c |
|
40,00,000
|
|||
| To Premium on Redemption of Debentures A/c |
|
4,00,000
|
|||
| (Application money transferred to Debentures A/c) |
|
|
|||
|
|
|
||||
| Sep.30 | Debentures Interest A/c | Dr. |
1,80,000
|
|
|
| To Debentureholders’ A/c |
|
1,62,000
|
|||
| To TDS Payable A/c |
|
18,000
|
|||
| (Interest due) |
|
|
|||
|
|
|
||||
| Sep.30 | Debenture holders’ A/c | Dr. |
1,62,000
|
|
|
| TDS Payable A/c | Dr. |
18,000
|
|
||
| To Bank A/c |
|
1,80,000
|
|||
| (Interest paid) |
|
|
|||
|
|
|
||||
| 2019 |
|
|
|||
| Mar.31 | Debenture Interest A/c | Dr. |
1,80,000
|
|
|
| To Debentureholders’ A/c |
|
1,62,000
|
|||
| To TDS Payable A/c |
|
18,000
|
|||
| (Interest due) |
|
|
|||
|
|
|
||||
| Mar.31 | Debenture holders’ A/c | Dr. |
1,62,000
|
|
|
| TDS Payable A/c | Dr. |
18,000
|
|
||
| To Bank A/c |
|
1,80,000
|
|||
| (Interest paid) |
|
|
|||
|
|
|
||||
| Mar.31 | Statement of Profit & Loss A/c | Dr. |
3,60,000
|
|
|
| To Debentures Interest A/c |
|
3,60,000
|
|||
| (Interest transferred to P&L) |
|
|
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