Question

When debenture are issued as collateral security, the final entry for recording the transaction in the books is _______.

• A. Credit debenture A/c. and Debit cash A/c.
• B. Debit debenture suspense A/c. and credit cash A/c.
• C. Debit debenture suspense A/c. and credit debenture A/c.
• D. Debit cash A/c. and credit loan A/c. for which security is given

Answer 1

The correct option is C Debit debenture suspense A/c. and credit debenture A/c.

A collateral security may be defined as a subsidiary or secondary or additional security besides the primary security when a company obtains a loan or overdraft from a bank or any other financial institutions. The final journal entry for recording this transaction is:

Debenture suspense A/c Dr.

To Debenture A/c