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A company issues 2,000 debentures of Rs 500 each at 97% of face value. What amount is credited to the Debentures Account?

easy 2 marks Class 12 · Accountancy · Accounting for Debentures
Answer
970000

The correct answer is 970000 — Multiply by number of debentures: 485 × 2000 = Rs 970,000

Step-by-step solution

  1. Compute face value per debenture: Rs 500
  2. Compute issue price per debenture: 97% of Rs 500 = 0.97 × 500 = Rs 485
  3. Multiply by number of debentures: 485 × 2000 = Rs 970,000
Common mistake: Forgetting to multiply the discount amount by the number of debentures

Concept tested: Discount on issue of debentures

Published · How this solution was prepared and checked

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