TV Components Ltd., issued 10,000, 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?
Answer & explanation
Correct answer: option 2
The correct answer is option 2-
12% Debenture Allotment A/c Dr र5,50,000
Discount on Issue of Debentures A/c Dr र50,000
To 12% Debenture A/c र6,00,000
(Allotment money due on debentures)
Allotment money= र55.
It is excluding discount of र5
Discount = 10,000 X 5
= र50,000
Allotment money = 10,000 x 55
= र5,50,000
Amount in debentures = 50,000 + 5,50,000
= र6,00,000
So, the journal entry for the due of payment on allotment is as follows-
12% Debenture Allotment A/c Dr र5,50,000
Discount on Issue of Debentures A/c Dr र50,000
To 12% Debenture A/c र6,00,000
(Allotment money due on debentures)