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%.

XYZ Ltd.issued 5,000, 10% Debentures of ₹ 100 each on 1st April, 201

1.	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» n: Books of XYZ Ltd. Journal Entries DATE PARTICULARS Debit Rs. Credit Rs. 2015 Bank A/C DR. 4.50,00To Debenture Application Ac 4,50,000 (Being application money received) In APRIL Debenture Application A/c Dr. 4,50,00( Lou On Issue of Debentures Ac Dr. 1,00,00To 10% Debenture A/C 5,00,000 To premium on Redemption A/c 50,000 (Beta 5.000 debentures of Rs.100 each issued at 10% discount with the TERM repayable at premium of 10%) 2015 30 Sep Interest on Debentures ke Dr. 25,000 To Debenture holders Ac 22,500 To Income Tax Payable Ac 2,500 (Being interest due on 10% debentures) Debenture holders A/c Dr. 22,500 To Bank A/c 22,500 (Being interest on debentures paid to debenture holders) 30' Sep Income Tax Payable A/c Dr. 2,500 To Bank AC 2,500 (Bens payment of tax on interest on debentures) 2016 31" Mar Interest on debentures Ac Dr. 25,03 To Debentures holders Ac 22,500 To Income Tax Payable A/c 2,500 (Being interest due on 10% debentures) 31" Mar Debenture holders Ac Dr. 22,500 To Bank Ac 22,500 (Being interest on debentures pad to debenture bolder.) Income Tax Payable A/c Dr. 2,500 To Bank Ac 2,500 (Being payment of tax on interest on debentures) Profit and Loss Ac Dr. 50,000 To Interest on debentures A/c 50,000 (Being interest on debentures transferred to profit and loss account) Working Note: Interest on Debentures (6 months) = 5,00,000 x x = 25,000

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