PQR Ltd. had issued ₹ 1,00,000, 8% debentures on which interest was payable half-yearly on 30th September and 31st March. Tax deducted at source is 10%. The necessary journal entries relating to debenture interest on 30t

CS Executive · Corporate and Management Accounting · PYQS · June 2023
PQR Ltd. had issued ₹ 1,00,000, 8% debentures on which interest was payable half-yearly on 30th September and 31st March. Tax deducted at source is 10%. The necessary journal entries relating to debenture interest on 30th September assuming that all money was duly paid by the company.
(A) Debenture Interest A/c DR ₹ 4,000 and CR Debenture Holder's A/c ₹ 4,000
(B) Debenture Interest A/c DR ₹ 4,000 and CR Debenture Holder's A/c ₹ 3,600 and Income Tax Payable A/c ₹ 400
(C) Debenture Interest A/c DR ₹ 8,000 and CR Debenture Holder's A/c ₹ 8,000
(D) Debenture Interest A/c DR ₹ 8,000 and CR Debenture Holder's A/c ₹ 7,200 and Income Tax Payable A/c ₹ 800

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B).

Topics: Corporate Accounting

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