Lesson eLearning

A company issues 2000 debentures of Rs 500 each at 95 % of face value. What amount is credited to the Debentures Account?

easy 2 marks Class 12 · Accountancy · Accounting for Debentures
Answer
Rs 10,00,000

The correct answer is Rs 10,00,000 — Hence the amount credited is Rs 10,00,000.

Step-by-step solution

  1. Determine face value of one debenture: Rs 500.
  2. Calculate issue price per debenture: 95 % of Rs 500 = .
  3. Multiply by 2000 debentures: .
  4. Add any issue expenses (none mentioned) to get total credit to Debentures Account.
  5. Hence the amount credited is Rs 10,00,000.
Common mistake: Adding 5 % of face value instead of subtracting 5 % discount

Concept tested: Debenture issue at discount

Published · How this solution was prepared and checked

← All Accounting for Debentures questions