Based on following information answer question:

Apex Ltd. issued to public ₹10,00,000, 10% Debentures of ₹100 each at par, redeemable at a premium of 20%. It also issued 10,000, 11% Debentures ₹100 each as collateral security of against bank loan of ₹8,00,000. 

The company bought building worth ₹50,00,000 from Beta Ltd. against a cheque of ₹20,00,000 and balance by issue of 12% Debentures of ₹100 each at a premium of 20%.

By what amount debentures interest account be debited, if debenture interest is payable annually?

₹ 4,00,000

The correct answer is Option (2) - ₹ 4,00,000.

1) Issued to public ₹10,00,000, 10% Debentures.
Interest = 1000000 x 10/100
            = ₹100000

2) Issued 10,000, 11% Debentures ₹100 each as collateral security of against bank loan of ₹8,00,000.
No interest is provided on debentures which are issued as a collateral security.

3) Building purchased and ₹30,00,000 paid by issue of 12% Debentures of ₹100 each at a premium of 20%.
No of debentures issued = 3000000/120
                                   = 25000
Debentures amount = 25000 x 100
                             = 2500000
Interest = 2500000 x 12/100
            = ₹300000

Total interest = 100000 + 300000
                   = ₹400000