Question :
Citizen Ltd. issued 10,000, 6% Debentures of Rs. 100 each at a discount of 10% redeemable at 10% premium. It has Securities Premium Reserve of Rs. 1,75,000. Loss on Issue of Debentures Rs. 2,00,000 will be written off by passing the following entry
Option 1: Debited securities premium with Rs 1,75,000 and credited loss on issue of debenture account Rs 1,75,000
Option 2: Debited securities premium reserve account with Rs 1,75,000 and debited surplus in profit and loss account Rs 25,000 and credited loss on issue of debenture account Rs 2,00,000
Option 3: Debited surplus in statement of profit and loss account Rs 2,00,000 and credited loss on issue of debentures account
Option 4: None of these
Correct Answer: Debited securities premium reserve account with Rs 1,75,000 and debited surplus in profit and loss account Rs 25,000 and credited loss on issue of debenture account Rs 2,00,000
Solution : Answer = Debited securities premium reserve account with 1,75,000 and debited surplus in profit and loss account Rs 25,000 and credited loss on issue of debenture account Rs 2,00,000
Loss on Issue of Debentures = (1,00,000+1,00,000) = Rs 2,00,000
JOURNAL ENTRY Securiites Premium Reseve A/c Dr 1,75,000 Surplus i.e. Statement in Profit & Loss A/c Dr 25,000 To Loss on Issue of Debentures A/c 2,00,000 Hence, the correct option is 2.
Intel Ltd. issued 10,000, 7% Debentures of Rs. 100 each at a discount of 10%. It has Securities Premium Reserve of Rs.1,50,000.Discount on Issue of Debentures, i.e., Rs. 1,00,000 will be written off by passing the following entry
Option 1: Securities premium account debited by Rs 1,00,000 and credited discount on issue of debentures account
Option 2: Debited profit and loss account and credited discount on issue of debenture account by Rs 1,00,000
Option 3: Debited profit and loss adjustment account and credited discount on issue of debenture account
Option 4: None of theses
Question : KTR Ltd., issued 365, 9% Debentures of Rs. 1,000 each on 4th March, 2016 at 6% discount, redeemable at 5% premium. Loss on issue of Debentures debited/credited with _____________.
Option 1: Loss on issue of debentures account debited with Rs.36,500
Option 2: Loss on issue of debentures credited with Rs.41,150
Option 3: Loss on issue of Debentures debited with Rs. 41,150
Option 4: Loss on issue of debentures debited with Rs. 40,150
Question : Home Products Ltd. issued on 1st April, 2019,10,000,9% Debentures of Rs. 100 each at a premium of 10% redeemable at a premium of 5% after 5 years. Issue price was payable along with application. Which of the following statements is correct?
Option 1: Loss on issue of debenture account will be debited by Rs. 50,000
Option 2: Premium on Redemption of Debentures account credited by Rs. 50,000
Option 3: Premium of Redemption of Debentures account will be credited by Rs. 1,00,000
Option 4: Securities premium account will be credited by Rs. 1,00,000
Question : On 1st April, 2018 X Ltd. issued 20,000, 10% Debentures of Rs.100 each at a discount of 5% redeemable at a premium of 4% after 5 years. It decided to write off loss on issue of debentures in the year ended 31st March, 2019. It has the following balances : Capital Reserve Rs.1,00,000 and Securities Premium Reserve Rs.50,000.
Question:- At the time of writing off loss on issue of debentures, securities premium reserve account will be __________.
Option 1: Credited by Rs. 50,000
Option 2: Debited by Rs. 50,000
Option 3: Debited by Rs. 1,80,000
Option 4: Credited by Rs. 1,80,000
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