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?

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)  

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)