Question

Xylo Ltd. issued 9,000, 7% Debentures of ₹ 100 each at a certain rate of discount. After writing off Discount on Issue of Debentures, the company was left with a balance of ₹ 35,000 in its Securities Premium Account out of the opening balance of ₹ 71,000. Rate of discount at which the company issued these debentures was

Options

• 4%.

• 5%.

• 6%.

• 7%.

Answer 1

4%.

Explanation:

Securities Premium used to write off discount:

₹ 71,000 − ₹ 35,000 = ₹ 36,000

Face value of debentures:

9,000 × ₹ 100 = ₹ 9,00,000

Rate of discount:

`(36,000)/(9,00,000) xx 100 = 4%`