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Home Questions UFNVD6J8CF
Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

What is the journal entry for the receipt of the application money for debentures if the entire amount is received in one installment?

Options:

Bank A/c Dr.
      To Debenture Application A/c

Bank A/c Dr.
    To Debenture Application & Allotment A/c

Debenture Application A/c Dr.
      To Bank A/c

Debenture Application & Allotment A/c Dr.
        To Bank A/c

Correct Answer:

Bank A/c Dr.
    To Debenture Application & Allotment A/c

Explanation:

When the entire amount for debentures is received in one installment, the journal entry is as follows: Debit the Bank Account (Bank A/c Dr.) because the company is receiving money from investors. Credit the Debenture Application and allotment Account because this account represents the entire money received from investors.

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