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A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry?
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A company issued 12% debentures of the face value of Rs ten lakh at te...
Journal Entry for Issuing 12% Debentures
On 1-1-2017, a company issued 12% debentures of the face value of Rs ten lakh at a ten% discount. The journal entry for this transaction is as follows:
Debit: Cash/Bank Account (Face Value - Discount)
Credit: Debenture Account (Face Value)
Journal Entry for Debenture Interest Payment
The company has to pay debenture interest after deducting tax at source @ ten% on 30th June and 31st of December every year. The journal entry for the debenture interest payment is as follows:
Debit: Debenture Interest Account
Credit: TDS Payable Account
Credit: Debenture Interest Payable Account (after deducting TDS)
Journal Entry for Debenture Redemption
All the debentures were to be redeemed after the expiry of five year period at 5% premium. The journal entry for the debenture redemption is as follows:
Debit: Debenture Redemption Reserve Account
Debit: Premium on Redemption of Debentures Account
Credit: Debenture Account (Face Value + Premium)
Explanation
Debentures are a type of long-term borrowing instrument issued by companies to raise funds. The company issues debentures at a discount or premium to the face value, and pays interest on them periodically. At the end of the debenture term, the company has to repay the principal amount along with the premium or discount as agreed upon.
In this case, the company issued 12% debentures of the face value of Rs ten lakh at a ten% discount on 1-1-2017. The journal entry for this transaction involves debiting the cash/bank account with the face value minus the discount, and crediting the debenture account with the face value.
The company has to pay debenture interest after deducting tax at source @ ten% on 30th June and 31st of December every year. The journal entry for the debenture interest payment involves debiting the debenture interest account and crediting the TDS payable account and the debenture interest payable account (after deducting TDS).
At the end of the five year period, the company has to redeem the debentures at a 5% premium. The journal entry for the debenture redemption involves debiting the debenture redemption reserve account and the premium on redemption of debentures account, and crediting the debenture account with the face value plus the premium.
On 1-1-2017, a company issued 12% debentures of the face value of Rs ten lakh at a ten% discount. The journal entry for this transaction is as follows:
Debit: Cash/Bank Account (Face Value - Discount)
Credit: Debenture Account (Face Value)
Journal Entry for Debenture Interest Payment
The company has to pay debenture interest after deducting tax at source @ ten% on 30th June and 31st of December every year. The journal entry for the debenture interest payment is as follows:
Debit: Debenture Interest Account
Credit: TDS Payable Account
Credit: Debenture Interest Payable Account (after deducting TDS)
Journal Entry for Debenture Redemption
All the debentures were to be redeemed after the expiry of five year period at 5% premium. The journal entry for the debenture redemption is as follows:
Debit: Debenture Redemption Reserve Account
Debit: Premium on Redemption of Debentures Account
Credit: Debenture Account (Face Value + Premium)
Explanation
Debentures are a type of long-term borrowing instrument issued by companies to raise funds. The company issues debentures at a discount or premium to the face value, and pays interest on them periodically. At the end of the debenture term, the company has to repay the principal amount along with the premium or discount as agreed upon.
In this case, the company issued 12% debentures of the face value of Rs ten lakh at a ten% discount on 1-1-2017. The journal entry for this transaction involves debiting the cash/bank account with the face value minus the discount, and crediting the debenture account with the face value.
The company has to pay debenture interest after deducting tax at source @ ten% on 30th June and 31st of December every year. The journal entry for the debenture interest payment involves debiting the debenture interest account and crediting the TDS payable account and the debenture interest payable account (after deducting TDS).
At the end of the five year period, the company has to redeem the debentures at a 5% premium. The journal entry for the debenture redemption involves debiting the debenture redemption reserve account and the premium on redemption of debentures account, and crediting the debenture account with the face value plus the premium.
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A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry?
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A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry?.
A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company issued 12% debentures of the face value of Rs ten lakh at ten% discount on 1-1-2017 . Debenture interest after deducting tax at source @ ten% was payable on 30th June and 31st of December every year. All the debentures were to be redeemed after the expiry of five year period at 5% premium.pass the journal entry?.
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