A Ltd. issued a ₹100, 7% debenture at a discount of 5% redeemable at 10% premium after 3 years. Choose the amount to be shown as loss on issue of debenture account.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) - ₹15.
Journal entry for this-
Debenture Application & Allotment A/c Dr. ₹95
Loss on Issue of Debentures A/c Dr. ₹15 ( ₹5 Discount on issue + ₹10 premium on redemption)
To Debentures A/c ₹100(with nominal value of debenture)
To Premium on Redemption of Debentures A/c ₹10 (with premium on redemption)
Thus, ₹15 will be shown in loss on issue of debentures account.