Question

If the whole amount of debenture is received in one installment, then the journal entry for making the allotment is:

• A. Debit Debenture a/c. and Credit Debenture application & allotment a/c.
• B. Debit Debenture application & allotment a/c. and credit Debenture a/c
• C. Both (A) and (B)
• D. None of the above

Answer 1

Answer: (B)

Debit Debenture application & allotment a/c. and credit Debenture a/c

Debentures may be issued at par, premium, or at discount. They can also be issued for consideration other than cash or as collateral security. Debentures are said to be issue at par when face value equals the issue price of the debenture, the journal entry for such issue is as follows:

If whole amount is received in one installment:

Bank A/c Dr.

To Debenture application and allotment A/c

Debenture application and allotment A/c Dr.

To Debentures A/c