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A company issues 1,000 debentures of Rs 100 each at 98. What amount is credited to the Debentures Account?

easy MCQ 1 mark Class 12 · Accountancy · Accounting for Debentures
  1. Rs 98,000
  2. Rs 100,000
  3. Rs 99,000
  4. Rs 97,000
Answer
Rs 98,000

The correct answer is Rs 98,000 — The Debentures Account is credited with the face value of debentures issued, i.e., Rs 98,000.

Step-by-step solution

  1. Calculate issue price per debenture: 98% of face value Rs 100 = Rs 98.
  2. Multiply by number of debentures: 1,000 × Rs 98 = Rs 98,000.
  3. The Debentures Account is credited with the face value of debentures issued, i.e., Rs 98,000.
Common mistake: Using the face value Rs 100,000 instead of the issue price Rs 98,000

Concept tested: Issue of debentures at discount

Published · How this solution was prepared and checked

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