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mediumMCQCUET Accountancy 2022 30 Aug Shift 22026Accountancy
1 mark

When debentures are issued at premium with the term of redeeming them at par. The amount of premium received at the time of issue will be:

  1. A
    Debited to premium on Redemption of Debenture A/C
  2. B
    Credited to Premium on Redemption of Debentures A/C
  3. C
    Debited to Securities Premium Reserve A/C
  4. D
    Credited to securities premium Reserve A/C

Solution & Step-by-step Explanation

When debentures are issued at a premium, the premium amount received is considered a capital receipt and is credited to the Securities Premium Reserve A/c.

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When debentures are issued at premium with the term of redeeming them at par. The amount of premium received at the time of issue will be:
A
Debited to premium on Redemption of Debenture A/C
B
Credited to Premium on Redemption of Debentures A/C
C
Debited to Securities Premium Reserve A/C
D
Credited to securities premium Reserve A/C

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