Question : On 1st April, 2018 X Ltd. issued 20,000, 10% Debentures of Rs.100 each at a discount of 5% redeemable at a premium of 4% after 5 years. It decided to write off loss on issue of debentures in the year ended 31st March, 2019. It has the following balances :
Capital Reserve Rs.1,00,000 and Securities Premium Reserve Rs.50,000.
Question:- At the time of writing off loss on issue of debenture. Statement of profit and loss account will be __________.
Option 1: Debited by Rs. 1,80,000
Option 2: Credited by Rs. 30,000
Option 3: Debited By Rs.1,30,000
Option 4: None of the above
Correct Answer: Debited By Rs.1,30,000
Solution : Answer = Debited By Rs.1,30,000
Journal entry will be:
Securities Premium Reserve A/c Dr 50,000
The surplus in Profit and loss A/c Dr 1,30,000
To Loss on the issue of Debentures A/c 1,80,000
Hence, the correct option is 3.
