Following Journal entry is passed in case of:
Debenture Application and Allotment A/ c Dr.
Loss on Issue of Debenture A/c Dr.
To Premium on Redemption of Debentures A/c
To Debentures A/c
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → When debenture are issued at discount and redeemed at Premium.
|
Loss on issue of debenture ↓ Debited ↓ To show discount on issue |
;
|
Premium on redemption ↓ Credited ↓ show redeemed at Premium |
Issue at discount and redemption at premium-
Bank A/c Dr.
To Debenture Application & Allotment A/c
(Receipt of application money)
Debenture Application & Allotment A/c Dr.
Loss on Issue of Debentures A/c Dr. (with discount on issue plus premium on redemption)
To Debentures A/c (with nominal value of debenture)
To Premium on Redemption (with premium on redemption) of Debentures A/c
(Allotment of debentures at a discount and redeemable at premium)