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Question : Pilot Pens Ltd. issued 5,000, 6% Debentures of Rs. 100 each at a discount of 20%. It had balance in Securities Premium Reserve of Rs. 60,000 and Rs. 10,000 in Surplus, i.e., Balance in Statement of Profit and Loss. Profit for the year before writing off the balance of Discount on the Issue of Debentures is Rs.20,000. Balance shown in the statement of profit and loss will be 

 

Option 1: Rs 1,00,000

Option 2: Rs 10,000

Option 3: Rs 20,000

Option 4: Rs 30,000


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 22nd Jan, 2024

Correct Answer: Rs 10,000


Solution : Answer = Rs 10,000

Discount on issue of Debentures = 1,00,000

(5000 @ 100 each) = 5,00,000 x 20/100

Securities Premium Reserve A/c Dr                 60,000

Surplus in the Statement of Profit and Loss Dr 40,000

To discount on the issue of debentures A/c                  1,00,000

Profit and loss (balance) 10,000
(+) profit earned during the current year 20,000
30,000
(-) Discount on issue of Debentures (40,000)
Profit and loss 10,000

Hence, the correct option is 2.

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