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Question
Xylo Ltd. issued 9,000, 7% Debentures of ₹ 100 each at a certain rate of discount. After writing off the discount on the issue of debentures, the company was left with a balance of ₹ 35,000 in its Securities Premium out of the original amount of ₹ 71,000.
At what rate of discount did the company issue these Debentures?
Solution
| Original amount in securities premium | 71,000 |
| Less: Balance left | 35,000 |
| Discount written off from securities premium | 36,000 |
Number of debentures issues = 9,000
Discount per share = `("36,000")/("9,000")` = ₹ 4
Rate of discount = `("Discount")/("Face Value")xx100`
= `4/100xx100`
= 4%
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Answer in a sentence only.
What is meant by ‘Issue of debenture at discount and redeemable at premium’?
Write one word/term/phrase which can substitute the following
The issue of debentures more than face value of debentures
State to whether the following statement is True/False.
The issue of debentures less than face value of debenture to termed as issue of debentures at discount.
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- The adjustment and receipt of interest on calls in arrears
- The entry to close the interest on calls in arrears account
Pass journal entries relating to issue of debentures for the following transactions:
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- Issued ₹ 5,00,000, 9% debentures of ₹ 100 each at 10% premium redeemable at par.
- Issued ₹ 6,000, 9% debentures of ₹ 100 each at a discount of 10% redeemable at par.
Pass necessary journal entries for the issue of debentures in the following cases :
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- Issued 90,000, 9% debentures of ₹100 each at par, redeemable at par after 4 years.
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- Issued 5,000, 9% debentures of ₹ 100 each at a discount of 10% redeemable at a premium of 5% after 5 years.
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