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 debentures, securities premium reserve account will be __________.
Option 1: Credited by Rs. 50,000
Option 2: Debited by Rs. 50,000
Option 3: Debited by Rs. 1,80,000
Option 4: Credited by Rs. 1,80,000
Correct Answer: Debited by Rs. 50,000
Solution : Answer = Debited by Rs. 50,000
It is because the securities premium balance is Rs 50,000.
Securities Premium A/c Dr 50,000
To Loss on the issue of Debentures A/c 50,000
Hence, the correct option is 2.
