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___.

• A. ₹ 3,00,000
• B. ₹ 1,50,000
• C. ₹ 30,000
• D. ₹ 4,50,000

Hint:

‘Loss on issue of debentures’ includes both discount on issue and premium on redemption. Subtract the discount from total loss to find the premium.

Answer 1

The Correct Option is A

Step 1: Calculate total face value of debentures issued:
\[ 30,000 \times ₹ 100 = ₹ 30,00,000 \] Step 2: Discount on issue = 10% of face value
\[ 10% \times 30,00,000 = ₹ 3,00,000 \] Step 3: Total loss on issue of debentures = ₹ 4,50,000
This includes discount on issue + premium on redemption. Step 4: Calculate premium on redemption:
\[ \text{Premium} = \text{Loss on issue} - \text{Discount on issue} = ₹ 4,50,000 - ₹ 3,00,000 = ₹ 1,50,000 \]