A firm issues 800 debentures of Rs 1,00,000 each at 104% of face value. Issue expenses are Rs 4,000 per debenture and the firm receives a 15% discount on these expenses. Find (i) the amount to be credited to the Debentures Account and (ii) the net cash received by the company.

Step-by-step solution

1. Issue price per debenture = 104% of Rs 1,00,000 = 1.04 $\times$ 1,00,000 = Rs 1,04,000.
2. Amount credited to Debentures Account = 800 $\times$ 1,04,000 = Rs 83,200,000.
3. Gross issue expense = Rs 4,000 $\times$ 800 = Rs 3,200,000.
4. Discount on expense = 15% of Rs 3,200,000 = 0.15 $\times$ 3,200,000 = Rs 480,000.
5. Net issue expense = 3,200,000 - 480,000 = Rs 2,720,000.
6. Net cash received = Amount credited - Net issue expense = 83,200,000 - 2,720,000 = Rs 80,480,000.

Concept tested: Issue at premium with discounted expenses

Published 28 September 2026 · How this solution was prepared and checked