ABC Industries Ltd, issued 2,000, 10% Debentures of Rs.100 each, at a premium of Rs. 10 per debenture payable as follows: On application Rs. 50 On allotment Rs. 60 The debentures were fully subscribed, and all money was duly received. The amount of long-term borrowings on the balance sheet will be

2,00,000

The correct answer is Option (1) → 2,00,000

• Number of Debentures Issued: 2,000

• Face Value of each Debenture: Rs. 100

• Total Face Value of Debentures: $$2,000\text{ debentures}\times \text{Rs. }100/\text{debenture}=\text{Rs. }2,00,000$$

This $\text{Rs. }2,00,000$ represents the principal amount that ABC Industries Ltd. owes to the debenture holders and is classified as Long-term Borrowings on the Balance Sheet.

The premium of $\text{Rs. }10$ per debenture ($\text{Total Premium}=2,000\times \text{Rs. }10=\text{Rs. }20,000$) is a capital profit and is credited to the Securities Premium Reserve Account.