Suvidha Ltd. purchased machinery worth Rs.1,98,000 from Suppliers Ltd. The payment was made by issue of 12% debentures of Rs.100 each. How many debentures will be issued at a 10% discount?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 2,200 debentures
When debentures are issued to a vendor, the number issued is the purchase consideration divided by the issue price, and at a discount the issue price is below the face value.
Issue price = Rs. 100 − 10% of Rs. 100 = Rs. 90
Number of debentures = Rs. 1,98,000 / Rs. 90 = 2,200 debentures
The discount of Rs. 10 on each of the 2,200 debentures (Rs. 22,000) is debited to Discount on Issue of Debentures Account, so the 12% Debentures Account is credited with the face value of Rs. 2,20,000.
NCERT (2026-27 edition):
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