Question

Floater Ltd. issued 60,000; 8% debentures of ₹ 100 each at 5% Discount and to be redeemed at 10% premium at the end of 5 years. On the date of issue, balance in Securities Premium was ₹ 8,00,000 and Statement of Profit Loss (Dr.) was ₹ 5,00,000.

After writing off Loss on Issue of Debentures, ______ balance in Statement of Profit and Loss will be ______.

विकल्प

• Debit; ₹ 6,00,000

• Credit; ₹ 6,00,000

• Debit; ₹ 4,00,000

• Credit; ₹ 4,00,000

Answer 1

After writing off Loss on Issue of Debentures, Debit balance in Statement of Profit and Loss will be ₹ 6,00,000.

Explanation:

Total Loss on Issue of Debentures:

Discount on issue = 5% of 100 = ₹ 5

Premium on redemption = 10% of 100 = ₹ 10

Total loss per debenture = ₹ 15

Total debentures = 60,000

Total Loss = 60,000 × 15

= ₹ 9,00,000

Securities Premium balance = ₹ 8,00,000

Balance loss to be written off from Statement of P/L:

= 9,00,000 − 8,00,000

= 1,00,000

New balance in Statement of Profit & Loss:

Given P & L (Dr.) already = ₹ 5,00,000

5,00,000 + 1,00,000

= 6,00,000