Question

Which of the following column indicated in the statement given below is to be debited?

"Issue of debentures to a vendor in consideration of the business purchase"

विकल्प

• Vendors account

• Cash account

• Debentures account

• None of the above

Answer 1

Vendors account

Explanation:

When a firm buys assets from a vendor, instead of paying cash, it issues debentures in exchange for the asset. Debentures offered for something other than cash are one type of debenture. The debentures may be issued at par, at a premium, or at a discount in that instance as well. In such event, the entries are the same as for shares issued for consideration other than cash, which is as follows:-

On purchase of assets-

Sundry Assets A/c Dr.to Vendor's

On issue of debentures at Par

Vendors Dr. to Debentures A/c