Question

Nitya Ltd. issued 9,000, 11% Debentures of Rs 100 each at Rs 97 per debenture. On issue of these debentures, 11% Debentures Account was credited by :

• A. Rs 11,00,000
• B. Rs 10,00,000
• C. Rs 9,00,000
• D. Rs 9,70,000

Hint:

The Debentures Account is always credited at the face value: 9,000 x Rs. 100 = Rs. 9,00,000.

Answer 1

The Correct Option is C

Step 1: Understand the rule:
A company credits the Debentures Account with the nominal (face) value of debentures issued.
The issue price only decides the cash received. The difference to face value goes to the Discount or Premium account.

Step 2: Calculate:
Number of debentures = 9,000. Face value of each = Rs. 100.
Credit to 11% Debentures A/c = 9,000 x 100 = Rs. 9,00,000.
Cash received = 9,000 x 97 = Rs. 8,73,000, so the discount on issue is Rs. 27,000.

Step 3: Pass the entry:
Bank A/c Dr. Rs. 8,73,000 and Discount on Issue of Debentures A/c Dr. Rs. 27,000, To 11% Debentures A/c Rs. 9,00,000.

Step 4: Why the other options are wrong:
(A) Rs. 11,00,000 does not follow from the figures.
(B) Rs. 10,00,000 would need 10,000 debentures, but only 9,000 were issued.
(D) Rs. 9,70,000 does not match 9,000 debentures at any price here. The issue price of Rs. 97 is never used for the Debentures Account.

Final Answer:
The 11% Debentures Account is credited by Rs. 9,00,000, option (C).