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Redemption of debentures


Savithry (Student)     21 August 2019

Savithry
Student 
 2 likes  60 points

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Timex Ltd  issued 1000 8% debentures of RS 100 each.give appropriate journal entries..

 1) Issued at a discount of 5% ,repayable at a premium of 10%

Journal entry

Bank a/c   dr  95000                                                     Dis on issue of debentures a/c  Dr  5000               Loss on issue of debentures a/c  dr 10000                       To 8% debentures a/c  Dr  100000                             To premium on redemption of debentures a/c dr 10000

Can anyone please explain me why loss on issue of debentures should be debited and premium on redemption should be credited ???

 

 

 




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