Tag: issue of debentures

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Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

G Ltd purchased land and building from H Ltd. at a book value of Rs. 2,00,000. The consideration was paid by issue of 12% debentures of Rs. 100 each at a discount of 20%. For this transaction, the debentures account would be credited with -

  1. Rs. 2,60,000

  2. Rs. 2,50,00

  3. Rs. 2,40,00

  4. Rs. 1,60,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Debentures issued at discount of 20%. 
 Number of Debentures issued = 2,00,000/80
                                                     = 2500
Face Value of Debentures = Rs. 100
Debentures account would be credited with 2500*100 = Rs. 2,50,000