Company Accounts

Debentures

Medium

common

In case debentures were issued as collateral security for taking loan from ABC Bank. Choose the correct journal entry for cancellation of debentures as collateral security on repayment of bank loan.

% Debentures A/c Dr.

To Bank A/c

Debenture Suspense A/c Dr.

To % Debentures A/c

% Debentures A/c Dr.

To Debenture Suspense A/c

Bank A/c Dr.

To % Debentures A/c

✅ Correct Option: 3

Under the entry method, issuing debentures as collateral is recorded as Debenture Suspense A/c Dr. To Debentures A/c. This is only a contingent record, not a real liability.

Once the bank loan is repaid, the collateral debentures return to the company and the original entry must be reversed: Debentures A/c Dr. To Debenture Suspense A/c.

2022: 20 Aug Shift 2

The company purchased plant with a book value of Rs. 1,90,000 from National Victory Company and agreed to pay via issuing 2000, 10% Debentures of Rs. 100 each at a discount of 5%.

Amount that will be credited to 10% Debenture A/c will be:

2026: 31 May Shift 1

Arrange the following in order in case of issue of debenture at discount.

A. Allotment due

B. Receipt of application money

C. Transfer of discount to Statement of Profit & Loss

D. Allotment of debentures

Choose the correct answer from the options given below:

2026: 29 May Shift 2

__________ 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.

2026: 23 May Shift 2

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	Irredeemable Debentures	I. can be transferred by way of delivery.
B.	Zero Coupon Rate Debentures	II. also known as Perpetual Debentures.
C.	Bearer Debentures	III. debentures which can be transferred only by executing a regular transfer deed.
D.	Registered Debentures	IV. do not carry a specific rate of interest.

Choose the correct answer from the options given below:

2025: 30 May Shift 1

Suvidha Ltd. purchased machinery worth Rs.1,98,000 from Suppliers Ltd. The payment was made by issue of 12% debentures of Rs.100 each. How many debentures will be issued at a 10% discount?

2025: 13 May Shift 2

ABC Ltd., Issued 3,000, 14% Debentures of Rs. 100 each at a discount of 5% on April 1, 2023. Interest on these debentures is payable annually on March 31 each year. The debentures are redeemable at par in three equal instalments at the end of the third, fourth and fifth year. Discount on issue of debentures is-

In case debentures were issued as collateral security for taking loan from ABC Bank. Choose the correct journal entry for cancellation of debentures as collateral security on repayment of bank loan.

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