Question

VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on Issue of Debentures Account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was ______.

Options

• ₹ 3,00,000

• ₹ 1,50,000

• ₹ 30,000

• ₹ 4,50,000

Answer 1

VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on Issue of Debentures Account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was ₹ 1,50,000.

Explanation:

Discount on issue of debentures = `30,000 × (10/100 xx 100)`

= 30,000 × 10

= ₹ 3,00,000

Loss on Issue of Debentures = ₹ 4,50,000

∴ Premium on Redemption of Debentures = Loss on Issue of Debentures − Discount on Issue of Debentures

= ₹ 4,50,000 – ₹ 3,00,000

= ₹ 1,50,000