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Discount on Issue of Debentures

Which account...

Question

Which account needs to debited for writing off discount on issue of debentures over the span of debentures?

A

Profit and Loss A/c

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B

Discount on issue of debentures

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C

Securities Premium A/c

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D

None of these

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Solution

The correct option is A
Profit and Loss A/c

Profit and Loss A/c needs to debited for writing off discount on issue of debentures over the span of debentures.

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Which account needs to credited for writing off discount on issue of debentures over the span of debentures?

Q. Tetley Ltd. issued 10,000,9% Debentures of ₹ 100 each at a discount of 5% redeemable at the end of 5 years at a premium of 10%. Tetley Ltd. has a balance of ₹ 50,000 in Securities Premium Reserve . Loss on Issue of debentures is to be written off equally over the life of debentures.
Pass the journal entries for writing off the Loss on Issue of Debentures.

Q. On 1st April, 2013, ABC Ltd. issued 10,000 , 10% Debentures of ₹ 100 each at a discount of 4% redeemable after 5 years at a premium of 6% .
Pass the necessary journal entries for issue of debentures and writing off Loss on issue of Debentures. Also prepare Loss on issue of Debentures Account.

Q. Grand Hotels Ltd.issued 30,000, 7% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 5% . It decided to write off loss on issue of debentures first from Capital Reserve then from Securities Premium Reserve and balance from Statement of Profit and Loss. It has balances as follows:
Capital Reserve

—

₹ 80,000 and Securities Premium Reserve

—

₹ 1,00,000 .
Pass the journal entry for writing off loss on Issue of Debentures .

Q. When debentures are issued at a discount & redeemed at a premium, we route discount on issue of debentures a/c through on issue of debentures a/c.

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