Question

Romerio Ltd. issued ₹ 80,00,000, 8% debentures of ₹ 100 each on 1st April, 2023 at par, redeemable at a premium of 5%. The company had ₹ 3,00,000 in its Securities Premium Account.
Give journal entries in the books of Romerio Ltd. relating to the: (i) Issue of Debentures
(ii) Debenture interest for the year ending 31st March, 2024 assuming that interest was paid yearly on 31st March.
(iii) Writing off Debenture Interest and Loss on Issue of Debentures.

Hint:

Always calculate debenture interest on face value and adjust the premium on redemption through loss or premium accounts.

Answer 1

Bank A/c Dr. ₹ 80,00,000
To 8% Debentures A/c ₹ 80,00,000
Debenture Interest A/c Dr. ₹ 6,40,000
To Debentureholders A/c ₹ 6,40,000
Debentureholders A/c Dr. ₹ 6,40,000
To Bank A/c ₹ 6,40,000
Loss on Issue of Debentures A/c Dr. ₹ 4,00,000
To Premium on Redemption of Debentures A/c ₹ 4,00,000