Question

Kitply Ltd.issued ₹ 2,00,000, 10% Debentures at a discount of 5% .The terms of issue provide the repayment at the end of 4 years . Kitply Ltd.has a balance of ₹ 5,00,000 in Securities Premium Reserve . The company decided to write off discount on issue of debentures from Securities Premium Reserve in the first year.
Pass the journal entry.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Security Premium Reserve A/c	Dr.		10,000
	To Discount on Issue of Debentures A/c				10,000
	(Discount on Issue of Debentures written off)

Note: Discount on issue of Debentures = 2,00,000×5% = Rs 10,000