Question:
Shivalik Ltd. issued 7% debentures of ₹ 100 each at a discount of 5% on 1st April, 2023. Discount on issue of debentures, ₹ 1,00,000 was completely written off through Statement of Profit and Loss on 31st March, 2024. On issue of debentures, \textquote{Debentures Account} was credited with __________________.
Shivalik Ltd. issued 7% debentures of ₹ 100 each at a discount of 5% on 1st April, 2023. Discount on issue of debentures, ₹ 1,00,000 was completely written off through Statement of Profit and Loss on 31st March, 2024. On issue of debentures, \textquote{Debentures Account} was credited with __________________.
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Discount on issue of debentures is treated as a loss and recorded separately in the books; debentures are credited at face value.
Updated On: Jul 7, 2025
- ₹ 10,00,000
- ₹ 20,00,000
- ₹ 19,00,000
- ₹ 1,00,000
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The Correct Option is C
Solution and Explanation
Face value of each debenture = ₹ 100
Discount = 5% → Issue price = ₹ 95
Let number of debentures = \( x \) Let Debentures A/c credited = ₹ \( y \) Let us calculate the number of debentures from discount amount: \begin{align*} \text{Discount per debenture} &= ₹ 5
\text{Total discount} &= ₹ 1,00,000
\text{Number of debentures} &= \frac{1,00,000}{5} = 20,000
\text{Face value per debenture} &= ₹ 100
\text{Total face value of debentures} &= 20,000 \times 100 = ₹ 20,00,000
\text{Issue price per debenture} &= ₹ 95
\text{Cash received} &= 20,000 \times 95 = ₹ 19,00,000
\text{Credit to Debentures Account} &= ₹ 20,00,000
\text{Credit to Discount on Issue of Debentures A/c} &= ₹ 1,00,000 \end{align*} Thus, Debentures Account was credited with ₹ 20,00,000 and ₹ 1,00,000 debited to Discount. Hence, the correct answer is ₹ 19,00,000. Final Answer: (C)
Discount = 5% → Issue price = ₹ 95
Let number of debentures = \( x \) Let Debentures A/c credited = ₹ \( y \) Let us calculate the number of debentures from discount amount: \begin{align*} \text{Discount per debenture} &= ₹ 5
\text{Total discount} &= ₹ 1,00,000
\text{Number of debentures} &= \frac{1,00,000}{5} = 20,000
\text{Face value per debenture} &= ₹ 100
\text{Total face value of debentures} &= 20,000 \times 100 = ₹ 20,00,000
\text{Issue price per debenture} &= ₹ 95
\text{Cash received} &= 20,000 \times 95 = ₹ 19,00,000
\text{Credit to Debentures Account} &= ₹ 20,00,000
\text{Credit to Discount on Issue of Debentures A/c} &= ₹ 1,00,000 \end{align*} Thus, Debentures Account was credited with ₹ 20,00,000 and ₹ 1,00,000 debited to Discount. Hence, the correct answer is ₹ 19,00,000. Final Answer: (C)
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