Which of the following will be included in case debenture's are issued to vendor at a discount for purchase consideration other than cash?

(A) % Debenture A/c is credited

(B) Vendor A/c is debited

(C) Discount on Issue of Debenture A/c is debited

(D) Securities Premium Reserve A/c is credited

Choose the correct answer from the options given below:

When debentures are issued to a vendor at a discount for purchase consideration other than cash, the following accounting treatment applies:

The journal entry recorded would be:

Vendor A/c Dr

Discount on Issue of Debentures A/c Dr

    To % Debentures A/c

Analysis of each statement:

(A) % Debenture A/c is credited → This is correct. The liability for debentures is created by crediting the Debentures Account with the face value of debentures issued.

(B) Vendor A/c is debited → This is correct. The vendor's account is debited with the agreed purchase consideration to close the liability towards the vendor.

(C) Discount on Issue of Debenture A/c is debited → This is correct. When debentures are issued at a discount (below face value), the discount is treated as a capital loss and debited to this account. This represents the difference between face value and issue price.

(D) Securities Premium Reserve A/c is credited → This is incorrect. Securities Premium Reserve is credited only when debentures are issued at a premium (above face value), not at a discount. Since the question specifically mentions discount, this entry would not arise.

Therefore, statements (A), (B) and (C) only are included in the transaction.

Correct Answer: Option 3