Question

X Ltd. purchased a building for ₹ 60,00,000 payable as 20% in Cash and balance by allotment of 8% debentures of ₹ 500 each at a premium of 20%. Number of debentures issued will be ______.

Options

• 9,600

• 8,000

• 12,000

• 10,000

Answer 1

X Ltd. purchased a building for ₹ 60,00,000 payable as 20% in Cash and balance by allotment of 8% debentures of ₹ 500 each at a premium of 20%. Number of debentures issued will be 8,000.

Explanation:

Calculate amount paid in Cash:

Cash Payment = 20% of ₹ 60,00,000 = ₹ 12,00,000

Balance to be paid via debentures:

Balance = ₹ 60,00,000 − ₹ 12,00,000 = ₹ 48,00,000

Issue price of one debenture:

• Face value = ₹ 500
• Premium = 20% of ₹ 500 = ₹ 100
• Issue Price per Debenture = ₹ 500 + ₹ 100 = ₹ 600

Number of debentures to be issued:

Number of debentures: `(₹ 48,00,000)/(₹ 600)` = 8,000