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Home Questions 4FMKFPSHV4
Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

TV Components Ltd., issued 10000, 12% debentures of र100 each at a discount of 5% payable as follows:
On application र40.
On allotment र55.
Discount is given at the time of allotment money.
What will be the journal entry for the due amount on the allotment?

Options:

12% Debenture Allotment A/c   Dr             र550000
Discount on Issue of Debentures A/c Dr      र100000
      To 12% Debenture A/c                                      र650000
(Allotment money due on debentures)  

12% Debenture Allotment A/c   Dr             र550000
Discount on Issue of Debentures A/c Dr      र50000
      To 12% Debenture A/c                                      र600000
(Allotment money due on debentures)  

12% Debenture Allotment A/c   Dr                 र600000
      To Discount on Issue of Debentures A/c Dr               र50000
      To 12% Debenture A/c                                           र550000
(Allotment money due on debentures)  

12% Debenture Allotment A/c   Dr                  र550000
      To Discount on Issue of Debentures A/c Dr               र50000
      To 12% Debenture A/c                                           र500000
(Allotment money due on debentures)  

Correct Answer:

12% Debenture Allotment A/c   Dr             र550000
Discount on Issue of Debentures A/c Dr      र50000
      To 12% Debenture A/c                                      र600000
(Allotment money due on debentures)  

Explanation:

Allotment money= र55 excluding discount of र5
Discount is 10000 X 5= र50000
Allotment money= 10000 x55 = र550000
Amount in debentures = 50000 + 550000 = र600000

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