If a company issue ₹1,00,000, 9% debentures of ₹100 each at discount of 5% but redeemable at premium of 5% then what amount will be debited to Loss on Issue of Debentures Account?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 10,000
The company receives less than the face value (discount) and will pay more than the face value on redemption (premium). Both are losses on the issue, so Loss on Issue of Debentures Account is debited with the discount plus the premium on redemption.
Discount on issue = 5% of Rs. 1,00,000 = Rs. 5,000
Premium on redemption = 5% of Rs. 1,00,000 = Rs. 5,000
Loss on Issue of Debentures A/c = Rs. 5,000 + Rs. 5,000 = Rs. 10,000
The entry: Debenture Application & Allotment A/c Dr. Rs. 95,000; Loss on Issue of Debentures A/c Dr. Rs. 10,000; To 9% Debentures A/c Rs. 1,00,000; To Premium on Redemption of Debentures A/c Rs. 5,000.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
|
