When Debentures are issue as collateral security to obtain loan from a bank, identify the account that is debited for recording the entry of issue of such debentures

Debentures suspense A/c

The correct answer is Option (4) - Debentures suspense A/c.

There are two treatments of issuing debentures as collateral security in the accounting books:

1. First Method

Company does not make any journal entry in the account books at the time of issue of these debentures. A note is attached below the loan on the liabilities side of the balance sheet. It will state the fact that they have been secured by the issue of debentures.

2. Second Method

Sometimes the issue of debentures as collateral security is shown by making the following journal entry: 
  Debenture Suspense A/c Dr. 
           To Debentures A/c