Tag: issue of debentures at par, premium, discount, collateral security and for consideration other than cash

Questions Related to issue of debentures at par, premium, discount, collateral security and for consideration other than cash

If a 2 - year redeemable bond is purchased and held till maturity , the rate of return earned is called ______________.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Coupon rate

  2. Required rate of return

  3. Yield to maturity

  4. Current yield

  5. Either (B) or (D) above

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Correct Option: C

Which of the following can be utilized for redemption of preference shares?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. The proceeds of fresh issue of debentures

  2. The proceeds of issue of fixed deposits

  3. The sale proceeds of investments

  4. Both (a) and (b)

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Correct Option: A

The Securities Premium amount may be utilised by a company for

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Writing off any loss on sale of fixed asset

  2. Writing off any loss of revenue nature

  3. writing off the expenses/ discount on the issue of debentures

  4. None of the above

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Correct Option: C

In case of an issue of a debenture of Rs$100$ at Rs$100$ but redeemable at Rs$106$, Rs$6$ is to be:

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Debited to Debenture Redemption Premium Account

  2. Credited to Loss on Issue of Debentures Account

  3. Debited to Loss on Issue of Debentures Account

  4. Debited to Discount on Issue of Debentures Account

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Correct Option: C

Which of the following is false with respect to debentures?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. These can be issued for cash

  2. These can be issued for consideration other than cash

  3. These can be issued as collateral security

  4. These can be issued in lieu of dividends

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Correct Option: D

Which of the following is/are true with respect to debentures?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. They can be issued for cash

  2. They can be issued for consideration other than cash

  3. These can be issued as collateral security

  4. Both (a) and (b) above

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Correct Option: D

When debentures are issued as collateral security, the final entry for recording the transaction in the books is ______.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Credit Debentures A/c and debit Cash A/c

  2. Debit Debentures Suspense A/c and credit Cash A/c

  3. Debit Debentures Suspense A/c and credit Debentures A/c

  4. Debit Cash A/c and credit the loan A/c for which security is given

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Correct Option: D

What is the journal entry for issuing debentures as collateral security?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash
  1. CashDebentures Dr.  Cr. 
  2. CashDebentures Suspense Dr.  Cr. 
  3. Debentures SuspenseDebenture Dr.  Cr. 
  4. LoanDebentures Dr.  Cr. 
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Correct Option: C

Monika Ltd. purchased land and building worth Rs. 28,80,000 and in lieu issued debentures of Rs. 100 each at a discount of $4\%$. What is the number of debentures issued?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. 28,000

  2. 30,000

  3. 32,000

  4. 35,000

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Correct Option: B

V Kare Ltd. issued R. 1,00,000, $7%$ debentures at $5\%$ discount redeemable after 10 years at premium of $5\%$.T he journal entry is:

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash
  1. Bank Account Discount on Debentures accountDebentures 95,000   5,000 1,00,000
  2. Bank Account Discount on Debentures accountDebentures 1,00,000    5,000 1,05,000
  3. Bank Account Discount on Debentures accountDebenturesPremium of redemption of debentures 1,00,000    5,000 1,00,000    5,000
  4. Bank Account Loss on the issue of debenturesDebenturesPremium of redemption of debentures 95,000 10,000 1,00,000    5,000
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Correct Option: D