The correct answer is option 3-
Vendors A/c Dr.
To Debentures A/c
To Securities Premium Reserve A/c
(debentures are issued at a premium)
When debentures are issued at a premium in exchange for assets, the journal entry reflects the accounting treatment for the premium received on the issuance of debentures is-
Vendors A/c Dr.
To Debentures A/c
To Securities Premium Reserve A/c
(debentures are issued at a premium)
Debit the Vendor's Account (Vendors Dr.) to account for the assets received from the vendor.
Credit the Debentures Account (Debentures A/c) to record the issuance of debentures.
Credit the Securities Premium Reserve Account (Securities Premium Reserve A/c) to account for the premium on the issuance of debentures.
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