Manik Ltd. issued 10,000, 8% debentures of Rs. 100 each at a discount of 10% redeemable at a premium of 10%. The issue was subscribed and the amount was duly received. The company had a balance of Rs. 70,000 in securities premium reserve on that date. On this date, it issued 1,00,000, equity shares of Rs. 10 each, also at a premium of Rs. 1 per share. Issue was also fully subscribed. Find the amount to be debited in the Statement of Profit and Loss while writing off Loss on Issue of Debentures A/c.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 30,000
When debentures are issued at a discount and are redeemable at a premium, the loss on issue is the discount plus the premium on redemption. It is written off first from the Securities Premium Reserve, and only the balance goes to the Statement of Profit and Loss.
Discount on issue = 10% of Rs. 10,00,000 = Rs. 1,00,000
Premium on redemption = 10% of Rs. 10,00,000 = Rs. 1,00,000
Loss on issue of debentures = Rs. 2,00,000
Securities premium available = Rs. 70,000 + (1,00,000 shares × Re. 1) = Rs. 1,70,000
Debited to the Statement of Profit and Loss = Rs. 2,00,000 − Rs. 1,70,000 = Rs. 30,000
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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