Read the following information and answer the questions:

On 1^st April 2013, a company made an issue of 10,000, 9% debentures of ₹ 100 each at ₹92 per debenture. The terms of issue provided for redemption of 2,000 debentures every year starting from 31^st March 2016, either by conversion into equity shares of ₹20 each or by drawn of lot at par at companies option. On 31^st March 2016 Company's redeemed 2,000, 9% debentures by converting them into equity shares of ₹20 each.

What Journal entry will be passed when equity shares are issued in conversion of debentures?

Debentureholders A/c Dr. 1,84,000
           To Equity Share Capital A/c   1,84,000

The correct answer is Option (3) →
Debentureholders A/c Dr. 1,84,000
           To Equity Share Capital A/c 1,84,000.

The debentureholder account is debited with the due amount and equity share capital account is credited with the same amount.