Question

Kitply Ltd.issued ₹ 2,00,000, 10% Debentures at a discount of 5%. The terms of issue provide the repayment at the end of 4 years. Kitply Ltd.has a balance of ₹ 5,00,000 in Securities Premium Reserve. The company decided to write off discount on issue of debentures from Securities Premium Reserve in the first year.
Pass the journal entry.

Answer 1

Answer:

Kitply Ltd.issued ₹ 2,00,000, 10% Debentures at a discount of 5%. The terms of issue provide the repayment at the end of 4 years. Kitply Ltd.has a balance of ₹ 5,00,000 in Securities Premium Reserve. The company decided to write off discount on issue of debentures from Securities Premium Reserve in the first year.

Pass the journal entry.

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Answer 2

Explanation:

Security premium will be calculated at 5 % on the Issue value and Discount at 5 % value

= 20,00,000 x 5 % = 10,000