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Question
On 1st 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.
Solution
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 |
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 |
shaalaa.com
Accounting Entries at the Time of Issue When Debentures Are Redeemable at Par and Premium
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