Globe Ltd. issues 20,000, 9% debentures of ₹ 100 each at a discount of 5%, redeemable at the end of 5 years at a premium of 6%. For what amount ‘Loss on Issue of Debentures Account’ will be debited?

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KollegeApply · Accepted Answer

₹ 2,20,000 Explanation: Given: Number of debentures = 20,000 Face value per debenture = ₹ 100 Discount on issue = 5% of ₹ 100 = ₹ 5 per debenture Premium on redemption = 6% of ₹ 100 = ₹ 6 per debenture Calculate total discount on issue: ₹ 5 $\times$ 20,000 = ₹ 1,00,000 Calculate total premium on redemption: ₹ 6 $\times$ 20,000 = ₹ 1,20,000 Total Loss on Issue of Debentures: ₹ 1,00,000 + ₹ 1,20,000 = ₹ 2,20,000.

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