Company Accounts

Debentures

Medium

(A) Discount on issue of debentures account is credited

(B) Loss on issue of debentures account is debited

(D) Premium on redemption of debentures account is credited

When debentures are issued at premium and redeemed at premium, the journal entry will have the following combination:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Correct Option: 4

When debentures are issued at a premium, it means they are sold for more than their face value. This creates a premium on issue, which is recorded in the accounts.

When these debentures are redeemed at a premium, the company pays more than the face value again. This creates a premium on redemption.

In the journal entries:

Loss on issue of debentures is debited because the company incurs a loss when they issue them at a premium.
Premium on redemption of debentures is credited because the company recognizes the premium they pay when redeeming.

-Security premium account is credited because the shares were issues at premium

Thus, the correct combination is (B), (C), and (D), leading to option 4 being correct.

2022: 15 July Shift 2

Loss on issue of Debenture is a _______

2025: 22 May Shift 2

Debentures can be issued at

(A) Par

(B) Premium

(D) Transaction value

Choose the correct answer from the options given below:

2026: 21 May Shift 2

The following journal entry appears in the books of X Co. Ltd.

Particular	Dr (₹)	Cr (₹)
Bank a/c Dr.	4,75,000
Loss on issue of debenture a/c Dr.	70,000
To 12% Debentures A/c		5,00,000
To Premium on Redemption of Debenture A/c		45,000

Debentures issued at discount of ______ and redeemable at a premium of ______.

2026: 23 May Shift 2

PQ Ltd. purchased assets worth Rs. 38,00,000. It issued debentures of Rs. 100 each at a discount of 5 percent in full satisfaction of the purchase consideration. The number of debentures issued to vendor are:

2025: 3 June Shift 2

In the case of __________ the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

2025: 30 May Shift 1

Match List-I with List-II

List-I	List-II
(A) These debentures refer to those debentures where a charge is created on the assets of the company for the purpose of payment in case of default.	(I) Bearer Debentures
(B) These debentures are those which are payable on the expiry of the specific period either in lump sum or in installments during the lifetime of the company.	(II) Zero Coupon Rate Debentures
(C) These debentures do not carry a specific rate of interest.	(III) Redeemable Debentures
(D) These debentures are the debentures which can be transferred by way of delivery and the company does not keep any record of the debentures interest on the debentures that is paid to a person who produces the interest coupon attached to such debentures.	(IV) Secured Debentures

Choose the correct answer from the options given below:

When debentures are issued at premium and redeemed at premium, the journal entry will have the following combination:

Solution

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