Question 40 Chapter 9 of +2-A - T.S. Grewal 12 Class

Question 40 Chapter 9 of +2-A

Table of Contents

The solution of Question 40 Chapter 9 of +2-A: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

40. XYZ Ltd.issued 5,000 , 10% Debentures of Rs 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%..

The solution of Question 40 Chapter 9 of +2-A: –

Date	Particulars		L.F.	Debit	Credit
2015
1 Apr	Bank A/c	Dr		4,50,000
	To Debenture Application A/c				4,50,000
	(Being Debenture Application Received )
1 Apr	Debenture Application A/c	Dr		4,50,000
	Loss on Issue of Debenture A/c	Dr		1,00,000
	To 10%Debenture A/c				5,00,000
	To Premium on Redemption A/c				50,000
	(Being Debenture issued on discount at par )
30 Sep	Interest on Debenture A/c	Dr		25,000
	To Debenture Holders A/c				22,500
	To Income tax Payable A/c				2,500
	(Being interest due on debenture )
30 Sep	Debenture holders A/c	Dr		88,000
	To Bank A/c				88,000
	(Being interest on Debenture paid to debenture holders )
30 Sep	Income Tax Payable A/c	Dr		2,500
	To Bank A/c				2,500
	(Being payment of Tax paid )
2016
31 Mar	Income Tax Payable A/c	Dr		25,000
	To Debenture holders A/c				22,500
	To Income Tax Payable A/c				2,500
	(Being interest due on debenture )
31 Mar	Debenture holders A/c	Dr		22,500
	To Bank A/c				22,500
	(Being Debenture interest paid to Debenture holder )
31 Mar	Income Tax Payable A/c	Dr		2,500
	To Bank A/c				2,500
	(Being payment of Tax on interest to debenture )
31 Mar	Profit and Loss A/c	Dr		50,000
	To Interest on Debenture A/c				50,000
	(Being interest in debenture transferred to profit and loss account )