Question

Subha Ltd. issued 20,000, 9% Debentures of ₹ 100 each at a premium to be redeemed at 10% premium. Loss on Issue of Debentures was written offfrom Statement of Profit & Loss debiting it by ₹ 80,000. Premium at which debentures were issued is

Options

• 5%.

• 6%.

• 8%.

• 10%.

Answer 1

6%.

Explanation:

Premium payable on redemption:

20,000 × ₹ 100 × 10% = ₹ 2,00,000

Amount charged to Statement of Profit & Loss = ₹ 80,000.

Therefore, premium on issue:

₹ 2,00,000 − ₹ 80,000 = ₹ 1,20,000

Rate of Premium = `(1,20,000)/(20,00,000) xx 100 = 6%`