Question

A limited company issued Rs. 10,00,000; 9% Debentures at a discount of 6% on 1st April, 2014. These debentures are to be redeemed equally, in 5 annual installments starting from 31st March, 2015. Discount on Issue of Debentures is written off during the tenure of debentures. Pass the journal entries for issue of debentures and writing off the discount. 

Answer 1

Working Note:

Calculation discount amount to be written off every year

Discount Amount = 10,00,000 x 6 % = 60,000