Page No 9.56:
Question 36:
Pass
necessary Journal entries for the issue of Debentures in the following cases:
(a) ` 40,000; 15% Debentures of ` 100 each issued at a discount of 10% redeemable at
par.
(b) ` 80,000; 15% Debentures of ` 100 each issued at a premium
of 10% redeemable at a premium of 10%.
Answer:
(a)
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
||
|
Bank A/c |
Dr. |
|
36,000 |
|
|
|
To Debenture Application A/c |
|
|
|
36,000 |
|
|
(400 debentures issued at ` 100 at discount of 10%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
36,000 |
|
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
4,000 |
|
|
|
To 15% Debenture A/c |
|
|
|
40,000 |
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|
(400 debentures issued at discount and redeemable at
a par ) |
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(b)
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
||
|
Bank A/c |
Dr. |
|
88,000 |
|
|
|
To Debenture Application A/c |
|
|
|
88,000 |
|
|
(800 debentures issued at ` 100 at a premium of 10%) |
|
|
|
|
|
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|
|
|
|
|
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|
Debenture Application A/c |
Dr. |
|
88,000 |
|
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
8,000 |
|
|
|
To 15% Debenture A/c |
|
|
|
80,000 |
|
|
To Premium on Redemption A/c |
|
|
|
8,000 |
|
|
To Securities Premium A/c |
|
|
|
8,000 |
|
|
(800 debentures issued at a premium of 10% and
redeemable at a premium of 10%) |
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Page No
9.56:
Question 37:
XYZ Ltd. issued
5,000 , 10% Debentures of `
100 each on 1st April, 2015 at a discount of 10% redeemable at a premium of 10%
after 4 years. Give journal entries for the year ended 31st March, 2016,
assuming that the interest was payable half-yearly
on 30th September and 31st March. Tax is to be deducted @ 10%.
Answer:
Books of XYZ Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
|
2015 |
|
|
|
|
|
April 01 |
Bank
A/c |
Dr. |
|
4,50,000 |
|
|
To Debenture
Application A/c |
|
|
|
4,50,000 |
|
(Debenture
application money received) |
|
|
|
|
|
|
|
|
|
|
April 01 |
Debenture
Application A/c |
Dr. |
|
4,50,000 |
|
|
Loss
on Issue of Debentures A/c |
Dr. |
|
1,00,000 |
|
|
To 10% Debentures A/c |
|
|
|
5,00,000 |
|
To Premium on
Redemption A/c |
|
|
|
50,000 |
|
(5,000
Debentures of ` 100 each issued at 10% discount with the term
repayable at a premium of 10%) |
|
|
|
|
2015 |
|
|
|
|
|
Sept. 30 |
Interest
on Debentures A/c |
Dr. |
|
25,000 |
|
|
To Debentureholders’
A/c |
|
|
|
22,500 |
|
To Income Tax Payable A/c |
|
|
|
2,500 |
|
(Interest
due on 10% Debentures) |
|
|
|
|
|
|
|
|
|
|
Sept. 30 |
Debentureholders’ A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(Interest
on debentures paid to debenture holders) |
|
|
|
|
|
|
|
|
|
|
Sept. 30 |
Income
Tax Payable A/c |
Dr. |
|
2,500 |
|
|
To Bank A/c |
|
|
|
2,500 |
|
(Payment
of tax on interest on debentures) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
March 31 |
Interest
on Debentures A/c |
Dr. |
|
25,000 |
|
|
To Debentureholders’
A/c |
|
|
|
22,500 |
|
To Income Tax Payable A/c |
|
|
|
2,500 |
|
(Interest
due on 10% Debentures) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Debentureholders’ A/c |
Dr. |
|
22,500 |
|
|
To Bank A/c |
|
|
|
22,500 |
|
(Debenture
Interest paid to Debenture holders) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Income
Tax Payable A/c |
Dr. |
|
2,500 |
|
|
To Bank A/c |
|
|
|
2,500 |
|
(Payment
of tax on interest on debentures) |
|
|
|
|
|
|
|
|
|
|
March 31 |
Profit
and Loss A/c |
Dr. |
|
50,000 |
|
|
To Interest on
Debentures A/c |
|
|
|
50,000 |
|
(Interest
on debentures transferred to Profit and Loss Account) |
|
|
|
|
|
|
|
|
|
|
Working Note:
Interest
on Debentures (for half year) = 5,00,000 × 10100 × 612 = ` 25,000
Page No 9.56:
Question 38:
Bright
Ltd. issued 5,000; 10% Debentures of ` 100 each on 1st April, 2015
. The issue was fully subscribed . According to the
terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at
source is 10%.
Pass necessary journal entries related to the debenture interest for the year
ending 31st March , 2016 and transfer of interest on
debentures of the year to the Statement of Profit and Loss .
Answer:
Journal In
the books of Bright Ltd. |
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Date |
Particulars |
L.F. |
Debit Amount (`) |
Credit Amount (`) |
|
2016 |
|
|
|
|
|
Mar. 31 |
Debentures Interest A/c |
Dr. |
|
25,000 |
|
|
To Debenture Holder’s A/c |
|
|
|
22,500 |
|
To Income Tax Payable A/c |
|
|
|
2,500 |
|
(Debentures interest due) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Holder’s A/c |
Dr. |
|
22,500 |
|
|
Income Tax Payable A/c |
|
|
2,500 |
|
|
To Bank A/c |
|
|
|
25,000 |
|
(Interest on debentures paid) |
|
|
|
|
|
|
|
|
|
|
Mar. 31 |
Statement of Profit & Loss A/c |
Dr. |
|
50,000 |
|
|
To Debentures Interest A/c |
|
|
|
50,000 |
|
(Interest transferred to profit and
loss) |
|
|
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Page
No 9.56:
Question 39:
On
1st April, 2015, V.V.L.Ltd issued 1,000, 9%
Debentures of `
100 each at a discount of 6%, redeemable at a premium of 10% after three
years. Pass necessary journal entries for the issue of debentures and debenture
interest for the year ended 31st March, 2016, assuming that interest is payable
on 30th September and 31st March and the rate of tax deducted at source is 10%.
The company closes its books on 31st March every year.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (`) |
Credit Amount (`) |
|
2015 |
|
|
|
|
|
Apr. 01 |
Bank
A/c |
Dr. |
|
94,000 |
|
|
To Debenture Application and Allotment A/c |
|
|
|
94,000 |
|
(Money
received on the issue of debentures) |
|
|
|
|
|
|
|
|
|
|
|
Debenture
Application and Allotment A/c |
Dr. |
|
94,000 |
|
|
Loss
on Issue of Debentures A/c |
Dr. |
|
16,000 |
|
|
To 9% Debentures A/c |
|
|
|
1,00,000 |
|
To Premium on Redemption of Debentures A/c |
|
|
|
10,000 |
|
(Debenture
application and allotment money transferred to Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
Sept 30 |
Debenture
Interest A/c |
Dr. |
|
4,500 |
|
|
To Debenture holders’ A/c |
|
|
|
4,050 |
|
To TDS Payable A/c |
|
|
|
450 |
|
(Interest
due) |
|
|
|
|
|
|
|
|
|
|
|
Debenture
holders’ A/c |
Dr. |
|
4,050 |
|
|
To Bank A/c |
|
|
|
4,050 |
|
(Payment
of interest) |
|
|
|
|
|
|
|
|
|
|
|
TDS
Payable A/c |
Dr. |
|
450 |
|
|
To Bank A/c |
|
|
|
450 |
|
(Payment
of tax) |
|
|
|
|
2016 |
|
|
|
|
|
Mar 31 |
Debenture
Interest A/c |
Dr. |
|
4,500 |
|
|
To Debenture holders’ A/c |
|
|
|
4,050 |
|
To TDS Payable A/c |
|
|
|
450 |
|
(Interest
due) |
|
|
|
|
|
|
|
|
|
|
|
Debenture
holders’ A/c |
Dr. |
|
4,050 |
|
|
To Bank A/c |
|
|
|
4,050 |
|
(Payment
of interest) |
|
|
|
|
|
|
|
|
|
|
|
TDS
Payable A/c |
Dr. |
|
450 |
|
|
To Bank A/c |
|
|
|
450 |
|
(Payment
of tax) |
|
|
|
|
Page
No 9.56:
Question 40:
Answer:
In the books of Kitply
Ltd. Journal |
||||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
||
1
April |
Bank
A/c |
Dr. |
|
1,90,000 |
|
|
To 10% Debenture
Application A/c |
|
|
1,90,000 |
|||
|
(Debenture
application money received at 5% discount) |
|
|
|
||
|
|
|
|
|
||
1
April |
10%
Debenture Application A/c |
Dr. |
|
1,90,000 |
|
|
|
Discount
on Issue of Debentures A/c |
Dr. |
|
10,000 |
|
|
|
To 10% Debentures A/c |
|
|
1,00,000 |
||
|
(Debenture
of ` 2,00,000
issued at 5% Discount with the term payable at 10% premium) |
|
|
|
||
|
|
|
|
|
||
31March |
Securities
premium reserve A/c Dr. |
10,000 |
||||
To Discount on Issue of Debentures A/c |
10,000 |
|||||
(Discount
written-off) |
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