Based on the case study details provided, when XYZ Ltd. pays out the purchase consideration via the allotment of debentures, the vendor account (Blue Prints Ltd. Account) will be:
- ADebited by
- BDebited by
- CCredited by
- DCredited by
Solution & Step-by-step Explanation
1. During the business purchase entry, the vendor is credited for the amount due to them:
When the debentures are issued to settle this liability, the vendor's account is debited to close it:
Thus, at settlement, the vendor account is debited by .
When the debentures are issued to settle this liability, the vendor's account is debited to close it:
Thus, at settlement, the vendor account is debited by .