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Question
Xylo Ltd. issued 9,000, 7% Debentures of ₹ 100 each at a certain rate of discount. After writing off the discount on the issue of debentures, the company was left with a balance of ₹ 35,000 in its Securities Premium out of the original amount of ₹ 71,000.
At what rate of discount did the company issue these Debentures?
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Solution
| Original amount in securities premium | 71,000 |
| Less: Balance left | 35,000 |
| Discount written off from securities premium | 36,000 |
Number of debentures issues = 9,000
Discount per share = `("36,000")/("9,000")` = ₹ 4
Rate of discount = `("Discount")/("Face Value")xx100`
= `4/100xx100`
= 4%
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