Interest on Debentures
If you have seen an advertisement in newspaper regarding issue of debentures by a company, you must have noticed that ‘Debenture’ is always prefixed by a certain percentage say 9% Debentures or 12% Debentures. Have you ever thought what meaning does this prefix carry. It is the rate of interest per annum that will be paid to the debenture holders. Companies generally pay interest on its debentures after every six months. Journal entries that are made in the books of the company are as follows;
(i) Payment of Interest on Debentures
Debenture Interest A/c Dr
To Bank A/c
(Interest on ....% Debentures paid for six months ending ...@ ....% pa) (ii) Transfer of Debenture Interest to Profit and Loss A/c
Profit and Loss A/c Dr
To Debenture Interest A/c
(Debenture Interest transferred to Profit and Loss A/c)
Bookmark this post: | 
|
Save And Share :
0 comments:
Post a Comment