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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 debenture account will be debited by Rs. 50,000
 

Option 2: Premium on Redemption of Debentures account credited by Rs. 50,000

Option 3: Premium of Redemption of Debentures  account will be credited by Rs. 1,00,000

Option 4: Securities premium account will be credited by Rs. 1,00,000


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 10th Jan, 2024

Correct Answer: Premium of Redemption of Debentures  account will be credited by Rs. 1,00,000


Solution : Answer = Premium of Redemption of Debentures  account will be credited by Rs. 1,00,000

Premium on Redemption of Debentures Account will be credited by Rs. 10,00,000 X 5% = Rs. 50,000.
The securities premium reserve account will be credited by Rs. 1,00,000.
Hence, the correct option is 3.

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