Question : Home Products Ltd. issued on 1st April, 2019, 10,000, 9% Debentures of Rs. 100 each at a premium of 10% redeemable at a premium of 5% after 5 years. Issue price was payable along with application.
Which of the following statements is correct?
Option 1: Loss on issue of debentures account will be debited by Rs. 1,00,000
Option 2: Loss on issue of debentures account credited by Rs. 50,000
Option 3: Loss on issue of debentures account are to be written off from securities premium account by Rs. 50,000
Option 4: Premium on Redemption of debentures debited by Rs. 50,000
Correct Answer: Loss on issue of debentures account are to be written off from securities premium account by Rs. 50,000
Solution : Answer = Loss on issue of debentures account are to be written off from securities premium account by Rs. 50,000
Loss on issue of debentures Account will be debited by Rs 10,00,000 X 5 % = Rs. 50,000.
Written off from securities premium Account by Rs 50,000.
Hence, the correct option is 3.
