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Home Questions 6JSX5SA8PG
Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

What will be the journal entry for the issue of debentures, when 5000 debentures of ₹100 each are issued as Collateral Security against a loan of ₹450000 with an interest rate of 10%?

Options:

10% Debentures Suspense A/c    Dr.        ₹500000
          To Debenture A/c                                      ₹500000
(Issue of debentures as collateral security)

10% Debentures A/c    Dr.        ₹450000
     To Debenture Suspense A/c                 ₹450000
(Issue of debentures as collateral security)

10% Debentures Suspense A/c    Dr.        ₹450000
            To Debenture A/c                                                ₹450000
(Issue of debentures as collateral security)

10% Debentures A/c    Dr.        ₹500000
     To Debenture Suspense A/c                 ₹500000
(Issue of debentures as collateral security)

Correct Answer:

10% Debentures Suspense A/c    Dr.        ₹500000
          To Debenture A/c                                      ₹500000
(Issue of debentures as collateral security)

Explanation:

Total debentures issued= 5000 X 100 = ₹500000
So, journal entry will be: 

10% Debentures Suspense A/c    Dr.        ₹500000
          To Debenture A/c                                      ₹500000
(Issue of debentures as collateral security)

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