Textile Ltd. has issued debentures carrying a coupon rate of $12 %$ at a discount of $20 %$ . The effective rate of interest for company will be ______ .

12 %

No worries! We‘ve got your back. Try BYJU‘S free classes today!

15 %

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

10 %

No worries! We‘ve got your back. Try BYJU‘S free classes today!

9 %

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B $15 %$
Company has issued debentures at a discount of $20 %$ i.e., a debenture of Rs. $100$ has been issued at Rs. $80$ . But it will pay interest on face value of Rs. $100$ . Therefore, effective rate of discount will be $12 / 80 \times 100 = 15 %$

Suggest Corrections

Similar questions

Q. Comex Ltd. has issued

3, 000

Debentures of Rs.

100

each on

1.1.2005

. Coupon rate is

15 %

p.a. Interest is payable on

31

st March and

30

th September each year. Accounting year of the company is calendar year. What is secured interest on

31.12.2005

On 1.4.2015, J.K. Ltd. issued 8,000, $9 %$ debentures of Rs 1,000 each at a discount of $6 %$ , redeemable at a premium of $5 %$ after three years. The company closes its books on 31st March every year. Interest on $9 %$ debentures is payable on 30th september and 31st March every year. The rate of tax deducted at source is $10 %$ .

Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31.3.2016.

On 1^st Aril, 2017, Jumbo Ltd. issued 10,000; 12% debentures of Rs. 100 each a discount of 20%, redeemable after 5 years. The company decided to write-off discount on issue of such debentures over the life time of the Debentures. Show the items in the balance sheet of the company immediately after the issue of these debentures.

Q. Moon Ltd. issued 5,000 debentures of Rs. 100 each at a discount of 10%. The expenses on issue amounted to Rs. 20,000. The company wants to redeem the debentures at the rate of Rs. 1,00,000 each year commencing with the end of 5th year. How much discount and expenses should be written off in each year?

Pass journal entries in the following cases:
(a) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 5% redeemable at par.
(b) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 10% redeemable at par.
(c) A Co.Ltd. issued ₹40,000; 12% Debentures at par redeemable at 10% premium.
(d) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.
(e) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 10% redeemable at 110%.

Join BYJU'S Learning Program

Textile Ltd. has issued debentures carrying a coupon rate of 12% at a discount of 20%. The effective rate of interest for company will be ______ .

The correct option is B 15%Company has issued debentures at a discount of 20% i.e., a debenture of Rs. 100 has been issued at Rs. 80. But it will pay interest on face value of Rs. 100. Therefore, effective rate of discount will be 12/80×100=15%

Textile Ltd. has issued debentures carrying a coupon rate of $12 %$ at a discount of $20 %$ . The effective rate of interest for company will be ______ .

The correct option is B $15 %$
Company has issued debentures at a discount of $20 %$ i.e., a debenture of Rs. $100$ has been issued at Rs. $80$ . But it will pay interest on face value of Rs. $100$ . Therefore, effective rate of discount will be $12 / 80 \times 100 = 15 %$