A company issues 500 debentures of Rs\,100 each at a discount of 2\%. What amount is credited to the Debentures Account?

easy 2 marks Class 12 · Accountancy · Accounting for Debentures

Answer

Rs\,49,000

The correct answer is Rs\,49,000 — The Debentures Account is credited with the amount actually received, i.e., Rs\,49,000.

Step-by-step solution

Calculate the total face value: 500 $\times$ Rs\,100 = Rs\,50,000.
Determine the issue price per debenture: 100 $\times$ (100\% - 2\%) = Rs\,98.
Compute total amount received: 500 $\times$ Rs\,98 = Rs\,49,000.
The Debentures Account is credited with the amount actually received, i.e., Rs\,49,000.

Common mistake: Using the face value instead of the discounted issue price for the credit entry.

Concept tested: Issue of debentures at discount