Read the following information and answer the questions:
On 1st April 2013, a company made an issue of 10,000, 9% debentures of ₹100 each at ₹92 per debenture. The terms of issue provided for redemption of 2,000 debentures every year starting from 31st March 2016, either by conversion into equity shares of ₹20 each or by drawn of lot at par at companies option. On 31st March 2016 Company's redeemed 2,000, 9% debentures by converting them into equity shares of ₹20 each.
Which A/c will be debited at the time when amount is received on issue of debentures?
Answer & explanation
Correct answer: option 3
The correct answer is Option 3- Bank A/c.
(i) On receipt of the application money-
Bank A/c Dr.
To Debenture Application & Allotment A/c
(ii) On Allotment of debentures-
Debenture Application & Allotment A/c Dr.
To Debentures A/c