Question : If a debenture of Rs.100 is issued at Rs.106 and is redeemable at Rs.110, at the time of issue of debentures
A securities premium account will be:
Option 1: Debited by Rs 6
Option 2: Debited by Rs 10
Option 3: Credited by Rs 10
Option 4: Credited by Rs 6
Correct Answer: Credited by Rs 6
Solution : Answer = Credited by Rs 6
Bank A/c Dr. 106
To Deb. Application and allotment A/c 106
Deb. Application and Allotment A/c Dr 106
Loss on issue of Deb. A/c Dr. 10
To % Deb. A/c 100
To Securities Premium Reserve A/c 6
To Premium on Red. of Deb. A/c 10
Hence, the correct option is 4.
