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9.8 Double Entry Book Keeping (Section A)—ISC XII
Solution: In the Books of Pragati Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2015
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 3,50,000
To Debentures Redemption Reserve A/c 3,50,000
(Being the transfer of profits to Debentures Redemption Reserve) (WN 2)
April 1 Debentures Redemption Investment A/c ...Dr. 1,87,500
To Bank A/c 1,87,500
(Being the fixed deposit placed with Bank for 15% nominal value of
debentures to be redeemed)
2016
March 31 Interest on Debentures A/c (WN 1) ...Dr. 4,00,000
To Debentureholders’ A/c 3,60,000
To TDS Payable A/c 40,000
(Being the interest on debentures due and tax deducted @ 10%)
March 31 Debentureholders’ A/c ...Dr. 3,60,000
TDS Payable A/c ...Dr. 40,000
To Bank A/c 4,00,000
(Being the payment of debentures’ interest and TDS payable)
March 31 8% Debentures A/c ...Dr. 12,50,000
To Debentureholders’ A/c 12,50,000
(Being the payment due to debentureholders on redemption)
March 31 Debentureholders’ A/c ...Dr. 12,50,000
To Bank A/c 12,50,000
(Being the payment due to debentureholders discharged)
March 31 Debentures Redemption Reserve A/c ...Dr. 3,12,500
To General Reserve A/c 3,12,500
(Being one-fourth of DRR transferred to General Reserve on
redemption of one-fourth debentures)
March 31 Statement of Profit and Loss ...Dr. 4,00,000
To Interest on Debentures A/c 4,00,000
(Being the interest on debentures transferred)
2017
March 31 Interest on Debentures A/c ...Dr. 3,00,000
To Debentureholders’ A/c (WN 3) 2,70,000
To TDS Payable A/c 30,000
(Being the interest due on debentures)
March 31 Debentureholders’ A/c ...Dr. 2,70,000
TDS Payable A/c ...Dr. 30,000
To Bank A/c 3,00,000
(Being the debentures’ interest and TDS paid)
March 31 8% Debentures A/c ...Dr. 12,50,000
To Debentureholders’ A/c 12,50,000
(Being the payment due to debentureholders on redemption)
March 31 Debentureholders’ A/c ...Dr. 12,50,000
To Bank A/c 12,50,000
(Being the payment due to debentureholders discharged)