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Question
On 1.4.2015, MKM Ltd. issued 12,000, 11% debentures of `100 each at a discount of 8%, redeemable at a premium of 10% after three years. The company closes its books on 31st March every year. Interest on 11% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 11% debentures and debenture interest for the year ended 31.3.2016.
Solution
| Journal | ||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
2015 Apr 1
|
Bank A/c (12,000 × Rs 92) Dr. To Debenture Application and Allotment A/c (Being received application money on 12,000 Debenture.) |
11,04,000
|
11,04,000 |
|
| Apr 1 |
Debenture Application and Allotment A/c Dr. Discount on Issued of Debentures A/c(12,000 × Rs 8) Dr. Loss on Issued of Debentures A/c (12,000 x Rs 10) To 11% Debentures A/c (12,000 x Rs 100) To Premium on Redemption of Debentures A/c (12,000 x Rs 10) (Being application money transferred to Debenture Account.) |
11,04,000 96,000 1,20,000
|
12,00,000 1,20,000
|
|
| Sep 30 |
Debenture Interest A/c (1200000 x Rs 11% x 6/12) Dr. To Debentures holder’s A/c To TDS Payable A/c (Being interest due.) |
66,000
|
59,400 6,600
|
|
| Sep 30 |
Debentures holder’s A/c Dr. TDS Payable A/c Dr. To Bank A/c (1200000 x Rs 11% x 6/12) (Being interest Paid.) |
59,400 6,600
|
66,000
|
|
|
2016 Mar 31
|
Debenture Interest A/c (1200000 x Rs 11% x 6/12) Dr. To Debentures holder’s A/c To TDS Payable A/c (Being interest due.) |
66,000
|
59,400 6,600
|
|
| Mar 31 |
Debentures holder’s A/c Dr. TDS Payable A/c To Bank A/c (1200000 x Rs 11% x 6/12) (Being interest Paid.) |
59,400 6,600
|
66,000
|
|
| Mar 31 |
Statement of Profit & Loss A/c Dr. To Bank A/c (1200000 x Rs 11%) (Being interest transferred to Profit & Loss Account.) |
1,32,000
|
1,32,000
|
|
RELATED QUESTIONS
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| Particulars | (₹) | Particulars | (₹) |
| Security deposit for electricity for ten years | 30,000 | Uncalled amount on partly paid-up shares | 8,00,000 |
| Underwriting commission | 20,000 | 10% Debentures | 5,00,000 |
| General Reserve | 70,000 | Statement of P/L (Dr.) | 10,000 |
| Fixed Deposits | 2,00,000 | Calls-in arrears @ ₹ 1 per share | 40,000 |
| Premium on redemption of Debentures | 20,000 | Securities Premium | 2,00,000 |
| Equity Share Capital (1,00,000 shares of ₹ 10 each) |
10,00,000 |
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