Question

Assertion (A): Sanjay Ltd. issued 1,000, 9% Debentures of ₹ 1,000 each at a premium of 25% Debentures Account will be credited by ₹ 12,50,000.

Reason (R): Debentures Account is credited by the amount received for the debentures issued. Hence, Debentures Account will be credited by ₹ 10,00,000.

In the context of above two statements, which of the below options is correct?

Options

• Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is incorrect but Reason (R) is correct.

• Both Assertion (A) and Reason (R) are incorrect.

Answer 1

Both Assertion (A) and Reason (R) are incorrect.

Explanation:

Debentures A/c is credited with the face value, not the amount received.

1,000 × ₹ 1,000 = ₹ 10,00,000​

The additional 25% premium is credited separately to Securities Premium A/c.