W Ltd issued 10,000, 12% Debentures of ₹100 each at a ₹10 Premium, redeemable at a 10% premium. How much amount will be debited to Loss on the issue of Debenture account?

₹1,00,000

The correct answer is option 3- ₹1,00,000.

10,000, 12% Debentures of ₹100 each at a ₹10 Premium, redeemable at a 10% premium.
Premium on Redemption = 10% of 10,00,000
                                       = 1,00,000 (Loss on issue of Debentures)

Following Journal entry is passed for transaction debentures issued at premium and redeemed at premium.
Bank A/c Dr. (10,000 x 110)  11,00,000
    To Debenture Application & Allotment A/c (10,000 x 110)  11,00,000
(Receipt of application money)

Debenture Application & Allotment A/c Dr. (10,000 x 110)  11,00,000
Loss on Issue of Debentures A/c Dr. (with premium on redemption) (10,000 x 10)  1,00,000
       To Debentures A/c (with nominal value of debenture) (10,000 x 100)  10,00,000
       To Securities Premium Reserve A/c (with premium on issue) (10,000 x 10)  1,00,000
       To Premium on Redemption of Debentures A/c (with premium on redemption) (10,000 x 10)  1,00,000