A Ltd. issue 100000, 7 % debentures of 100 Rs. each at a discount of 4%, redeemable after 5 years at a premium of 6%.What will be the Loss on issue of debentures to be debited at the time of issue of debentures?
Answer & explanation
Correct answer: option 3
400000+600000=10,00,000
The journal entry will be:
Bank A/c Dr. 96,00,000
To Debenture Application & Allotment A/c 96,00,000
(Receipt of application money)
Debenture Application & Allotment A/c Dr. 9,600,000
Loss on Issue of Debentures A/c Dr. (with discount on issue plus premium on redemption) 10,00,000
To Debentures A/c (with nominal value of debenture) 1,00,00,000
To Premium on Redemption (with premium on redemption) of Debentures A/c 6,00,000
(Allotment of debentures at a discount and redeemable at premium)