Question

Precious Ltd. issued 40,000, 10% Debentures of ₹ 100 each at a premium of 5%, redeemable at a premium of 10%. 'Loss on Issue of Debentures Account' will be debited in the books of Precious Ltd. by ______.

Options

• ₹ 5,60,000.

• ₹ 2,40,000.

• ₹ 6,00,000.

• ₹ 4,00,000.

Answer 1

Precious Ltd. issued 40,000, 10% Debentures of ₹ 100 each at a premium of 5%, redeemable at a premium of 10%. 'Loss on Issue of Debentures Account' will be debited in the books of Precious Ltd. by ₹ 4,00,000.

Explanation:

Loss on Issue of Debentures is the premium payable on redemption.

40,000 × ₹ 100 × 10% = ₹ 4,00,000

The 5% premium received on issue is credited separately to Securities Premium A/c.