10% debentures of ₹100, issued at ₹105 and redeemable at ₹110, what will be the loss on the issue of debentures to be debited at the time of issue?
Answer & explanation
Correct answer: option 2
Debenture Application & Allotment A/c Dr. 105
Loss on Issue of Debentures A/c Dr. (with premium on redemption) 10
To Debentures A/c (with nominal value of debenture) 100
To Securities Premium Reserve A/c (with premium on issue) 5
To Premium on Redemption of (with premium on redemption) 10