Wilkinson Co.Ltd issued 10000, 10% debentures @ Rs.100 each on 1st April 2009. Interest is payable half- yearly on 30th September and 31th March every year. pass journal entries for the financial year 2013-14?

Question

Answer

Interest on debenture A/c ..Dr.       (10000×100×10/100×6/12)         To Debenture holders Ac

Answer

On 30th Sep,Interest on Debentures A/C Dr. 50,000To Debentureholders A/C. 50,000Debentureholders A/C Dr. 50,000To Bank A/C. 50,000Profit and Loss A/C Dr. 50,000To Interest on Debenture A/C. 50,000On 31st Mar, same entry is to be pass.

Answer

2001 Apr 1 Wilkinson Co. Ltd  -dr 17124to debenture a/c                 17124

Answer

Journal Entries for the Financial Year 2013-14 for Wilkinson Co. Ltd:

To record the transactions related to the debentures issued by Wilkinson Co. Ltd in the financial year 2013-14, the following journal entries are required:

1. April 1, 2013:
Debit: Cash/Bank
Credit: Debenture Subscription (10000 x Rs.100)

Explanation: On April 1, 2013, Wilkinson Co. Ltd issued 10,000 debentures at Rs.100 each. The company received cash/bank in exchange for these debentures. Hence, the cash/bank account is debited, and the debenture subscription account is credited.

2. September 30, 2013:
Debit: Interest on Debentures (10,000 x Rs.100 x 10% x 6/12)
Credit: Debenture Interest Payable

Explanation: On September 30, 2013, the company needs to record the interest expense for the half-year ending on that day. The interest on debentures is calculated using the formula: Principal amount x Rate of interest x Time period. Here, the principal amount is Rs.100 per debenture, the rate of interest is 10%, and the time period is 6 months. The interest on debentures account is debited, and the debenture interest payable account is credited.

3. March 31, 2014:
Debit: Interest on Debentures (10,000 x Rs.100 x 10% x 6/12)
Credit: Debenture Interest Payable

Explanation: On March 31, 2014, the company needs to record the interest expense for the half-year ending on that day. Similar to the entry on September 30, 2013, the interest on debentures account is debited, and the debenture interest payable account is credited.

Summary:
The journal entries for the financial year 2013-14 for Wilkinson Co. Ltd related to the 10% debentures issued are as follows:

1. April 1, 2013:
- Debit: Cash/Bank
- Credit: Debenture Subscription

2. September 30, 2013:
- Debit: Interest on Debentures
- Credit: Debenture Interest Payable

3. March 31, 2014:
- Debit: Interest on Debentures
- Credit: Debenture Interest Payable

These entries ensure that the issuance of debentures, payment of interest, and accrual of interest expenses are properly recorded in the financial statements of Wilkinson Co. Ltd for the year 2013-14.

Similar Commerce Doubts

A company issued 3000 5% Debentures of Rs100 each payable Rs.20 on application Rs.30on allotment and rest on first & final call.All the debenture money were recieved except on 500 debenture holders who did not pay allotment and first call money pass journal entries in the books of company.?

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