Question

Kangaroo Ltd. issued 5,000, 8% Debentures of ₹ 100 each at a discount of 8%. The company decided to write off discount in the year of loss from Capital Reserve which has a balance of ₹ 1,00,000. Pass the journal entry for writing off discount.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Capital Reserve A/c	Dr.		40,000
	To Discount on Issue of Debentures A/c				40,000
	(Discount on 8% Debentures written off)

Working Notes:
WN1: Calculation of discount amount to be written-off
$\mathrm{Discount}=10,00,000\times \frac{6}{100}=60,000$