Page 209 - ISCDEBK-12

Joint Stock Company—Issue of Debentures 8.3

Solved Questions

Illustration 1 (Interest on Debentures).

X Ltd. issued 5,000, 10% Debentures of ` 100 each on 1st April, 2018 at par redeemable
at a premium of 10%. TDS is deducted @ 10%. Pass Journal entries relating to issue of
debentures and debentures’ interest for the year ended 31st March, 2019 assuming that the
interest was payable half-yearly on 30th September and 31st March.
Solution: In the Books of X Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018 Bank A/c ...Dr. 5,00,000
April 1 To Debentures Application and Allotment A/c 5,00,000
(Being the amount received on application)
April 1 Debentures Application and Allotment A/c ...Dr. 5,00,000
Loss on Issue of Debentures A/c ...Dr. 50,000
To 10% Debentures A/c 5,00,000
To Premium on Redemption of Debentures A/c 50,000
(Being the issue of debentures at par and redeemable at 10% premium)
Sept. 30 Debentures’ Interest A/c ...Dr. 25,000
To Debentureholders’ A/c 22,500
To TDS Payable A/c 2,500
(Being the interest due for 6 months; TDS deducted @ 10%)
Sept. 30 Debentureholders’ A/c ...Dr. 22,500
To Bank A/c 22,500
(Being the payment of interest)
Sept. 30 TDS Payable A/c ...Dr. 2,500
To Bank A/c 2,500
(Being the TDS deducted deposited)
2019
March 31 Debentures’ Interest A/c ...Dr. 25,000
To Debentureholders’ A/c 22,500
To TDS Payable A/c 2,500
(Being the interest due for 6 months; TDS deducted @ 10%)
March 31 Debentureholders’ A/c ...Dr. 22,500
To Bank A/c 22,500
(Being the payment of interest)
March 31 TDS Payable A/c ...Dr. 2,500
To Bank A/c 2,500
(Being the TDS deducted deposited)
March 31 Statement of Profit and Loss ...Dr. 1,00,000
To Debentures’ Interest A/c 50,000
To Loss on Issue of Debentures A/c 50,000
(Being the transfer of Debentures’ Interest and Loss on
Issue of debentures to Statement of Profit and Loss)