T.S. Grewal Class 12 Vol 2 Chapter 2 Q.41 - Issue of Debentures

Question 41

Agam Ltd. issued 40,000; 9% Debentures of ₹100 each on 1st April, 2024, at a discount of 10%, redeemable at a premium of 10%. Assuming that the interest was paid half-yearly on 30th September and 31st March, give Journal entries relating to debenture interest for the year ended 31st March, 2025.

Solution

JOURNAL (Books of Agam Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
30-9-2024	Debenture Interest A/c    Dr.		1,80,000
	To Debenture Holders’ A/c			1,80,000
	(Interest allowed on debentures for the half year)
30-9-2024	Debenture Holders’ A/c    Dr.		1,80,000
	To Bank A/c			1,80,000
	(Interest paid)
31-3-2025	Debenture Interest A/c    Dr.		1,80,000
	To Debenture Holders’ A/c			1,80,000
	(Interest allowed on debentures for the half year)
31-3-2025	Debenture Holders’ A/c    Dr.		1,80,000
	To Bank A/c			1,80,000
	(Interest paid)
31-3-2025	Statement of Profit and Loss A/c    Dr.		3,60,000
	To Debenture Interest A/c			3,60,000
	(Debenture interest for the year transferred to the Statement of Profit and Loss)

Working Note: Half-yearly interest = 40,000 × ₹100 × 9% × 6/12 = ₹1,80,000.