What will be the journal entry for the issue of debenture of ₹100 at ₹98 but redeemed at a premium of ₹5 by the company?
Answer & explanation
Correct answer: option 2
Issue at discount and redemption at premium-
* Bank A/c Dr.
To Debenture Application & Allotment A/c
(Receipt of application money)
*Debenture Application & Allotment A/c Dr.
Loss on Issue of Debentures A/c Dr. (with discount on issue plus premium on redemption)
To Debentures A/c (with nominal value of debenture)
To Premium on Redemption (with premium on redemption) of Debentures A/c
(Allotment of debentures at a discount and redeemable at premium)