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Question
The following journal entry appears in the books of X Co. Ltd.
| Bank A/c ...Dr. | 4,75,000 | |
| Loss on issue of debenture A/c ...Dr. | 75,000 | |
| To 12% Debentures A/c | 5,00,000 | |
| To Premium on Redemption of Debenture A/c | 50,000 |
Debentures have been issued at a discount of:
Options
15%
5%
10%.
MCQ
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Solution
5%
Explanation:
Total Loss on Issue = 75,000
Premium on Redemption = 50,000
Total Loss = Discount on Issue + Premium on Redemption
Discount on Issue = 75,000 − 50,000
= 25,000
Discount Percentage = `("Discount on Issue"/"Face Value") xx 100`
Discount Percentage = `((25,000)/(5,00,000)) xx 100`
= 5%
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