Issue & Redemption of Debentures – Corporate and Management Accounting MCQ

In case of issue of debentures, the rate of underwriting commission paid or agreed to be paid shall not exceed:

Following balances appeared in the books of JKJ Ltd.:(a) Sinking fund account ₹ 62,500(b) Sinking fund investment account ₹ 60,000( 10% Govt, securities, nominal value ₹ 56,250)(b) Sinking fund investment account ₹ 60,000( 10% Govt, securities, nominal value ₹ 56,250)
(c) 12% Debenture account ₹ 1,25,000.The company sold ₹ 37,500 Govt, securities at 110% and redeemed part of the debentures at a premium of 10%. The closing balance of Sinking Fund A/c will be

Following balances appeared in the books of R Ltd.:12% Debentures – ₹ 8,00,000Sinking fund – ₹ 7,00,000Sinking fund investment – ₹ 7,00,000(Represented by 10% – ₹ 7,50,000 secured bonds of Government of India)The annual contribution to the sinking fund was ₹ 1,20,000 made on 31st March each year. On 31.3.2018, the balance at the bank was ₹ 3,50,000 before receipt of interest. The company sold the investments at 90% for the redemption of debenture at a premium of 10% on the above date. Amount to be transferred to general reserve after redemption of debentures will be

Following balances appeared in the books of Bright Ltd.:(A) Sinking fund account ₹ 50,000(B) Sinking fund investment account ₹ 48,000 (10% Govt, securities, nominal value ₹ 45,000)(C) 12% Debenture account ₹ 1,00,000.The company sold ₹ 30,000 Govt, securities at 110%, and redeemed part of the debentures at a premium of 10%. The closing balance of Sinking Fund A/c will be

Following balances stood in books X Ltd.:3.50.0. 6, Delhi Govt. Bonds 3,56,3004.0. 000, 5% Punjab Water Loan 3,20,3403.0. 000, 8% Goa Govt. Loan 3,08,550

80.0, 7% Gurgaon Gramin Loan 80,210Investments were sold as follows:6% Delhi Govt. Bond at par5% Punjab Water Loan at ₹ 918% Goa Govt. Loan at ₹ 1091% Gurgaon Gramin Loan at ₹ 103How much profit will be transferred to the debenture redemption fund account on the sale of the above investments?

On 1.1.2015 X Ltd. issued 10,000 fifteen years 10% debentures of ₹ 100 each. On 1.4.2020 the company gave notice to the debenture holders of its intention to redeem the debentures on 1.10.2020 either by payment in cash or by allotment of 11% preference shares of ₹ 100 each at ₹ 130 per share or 11% the second debenture of ₹ 100 at ₹ 96 per debenture. Holders of 4,000 debentures accepted the offer of the preference shares. How many preference shares will be issued if debentures are to be redeemed at a 4% premium?

Eagle Ltd. issued a 15% Debenture of ₹ 100 each at a discount of 5%, but redeemable at a premium of 5% at the end of 4 years then

Following journal entry appears in the books of KAKA Ltd.:Debentures are redeemable at a premium of

Janardhan Ltd. issued 40,00,000, 15% Debentures at 8% discount. Debentures are to be redeemed as per the schedule given below:Amount of discount to be written off in each the 5 calendar years

Following journal entry appears in the books of KAKA Ltd.:

On 1 st July, 2017a company issued 2,500,9% debentures of ₹ 100 each at a discount of 10%. The debentures were redeemable by five annual drawings of ₹ 50,000 on 31st March each year. Calculate the amount of discount on debentures to be written off at the end of each year on 31st March.

Rama Ltd. issued 40,000, 8% debentures of ₹ 10 each which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of Debentures to be written off every year will be

P Ltd. issued 5,000,12% debentures of ₹ 100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year =?

W Ltd. issued 20,000,8% debentures of ₹ 10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be:

On May 1, 2018, U WB Ltd. issued 7% 10,000 convertible debentures of ₹ 100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the total amount of interest expenditure debited to profit and loss account for the year ended March 31, 2019, will be:

T Ltd. has issued 14% Debentures of ₹ 20,00,000 at a discount of 10% on April 1, 2017, and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2019, the amount is shown as “interest accrued but not due” in the Balance Sheet will be

F Ltd. purchased Machinery from G Company for a book value of ₹ 4,00,000. The consideration was paid by the issue of 10% debentures of ₹ 100 each at a premium of 25%. The debenture account was credited with.

N Ltd. purchased a fixed asset of ₹ 4,00,000 out of ₹ 1,30,000 paid in cash and balance in debentures. The consideration was paid by the issue of 12% Debentures of ₹ 100 each at a 10% discount. No. debentures to be issued = ?

Ganga Ltd. purchased a fixed asset of ₹ 2,00,000. The consideration was paid by the issue of 12% Debentures of ₹ 100 each at a discount of 20%. Debenture A/c to be credited with

The expenses on issue amounted to ₹ 20,000. The company wants to redeem the debentures at the rate of ₹ 1,00,000 each year commencing with the end of the 5th year. How much discount and expenses should be written off in each year?

Z Ltd. issued ₹ 1,00,000 debenture at a discount of 6% on 1.1.2019 repayable in 5 equal installment. Discount to be written off in each 5 calendar year

The following data is available from the records of NS Ltd.:Issued capital ₹ 20,00,000Call in arrear ₹ 10,000P& LA/con 1.4.2018 ₹ 67,000Profit for the year ₹ 1,90,610The company wants to create a debenture redemption reserve and transfer ₹ 50,000 every year. The company declared a 10% dividend. Balance of surplus after effecting the above transaction?

X Ltd. obtained a loan from IDBI of ₹ 10,00,000, giving as collateral security of ₹ 15,00,000, 14% Debenture on 1st April 2019. Which of the following accounting treatment is correct to issue debenture as collateral security?

Z Ltd. issued 10% Debentures of ₹ 10 to a vendor having a face value of ₹ 2,50,000 for purchase of fixed assets of ₹ 2,00,000. No. of debentures to issued to vendors =?

HDC Ltd. issued 10,000, 12% Debentures of ₹ 100 each at ₹ 94 on 1st January 2010. Under the term of issue, 1 / 5th of the debentures are annually redeemable by drawings, the first redemption occurring on 31 st December, 2010. Calculate the amount of discount to be written off in 2010 & 2011.

ZPA Ltd. issued 10,000, 12% Debentures of ₹ 100 each at ₹ 94 on 1st January 2010. Under the terms of the issue, the debentures are redeemable at the end of 8 years from the date of the issue. Calculate the amount of discount to be written-off in each of the 8 years.

Z Ltd. issued 10,000,12% Debentures of ₹ 100 each at a discount of 10% payable in full on application by 31st May 2019. Applications were received for 12,000 debentures. Debentures were allotted on 9th June 2019. ‘ Excess monies were refunded on the same date. The amount that will appear in [ balance sheet as “ 12% Debentures” =?

ZPA Ltd. issued 10,000, 12% Debentures of ₹ 100 each at per payable in full on application by 1st April 2019. Applications were received for 11,000 Debenture. Debentures were allotted on 7th April 2019. Excess money was refunded. The amount that will appear in the balance sheet as “12% Debenture” =?

Correct entry to transfer interest received on sinking fund investment is

Debenture issued at par but redeemable at price less than face value then

If debentures are issued at discount but redeemable at a premium then

If nothing is stated, purchase & sale of debentures, government securities should be taken to be on

If the purchase price for the debentures includes interest for the expired period, the quotation is said to be

Loss on sale of Debenture Redemption Fund Investment account must be set-off against

Debenture redemption fund investment account will appear on the assets side of the balance sheet under the head, while debenture redemption fund account will appear on the liabilities side under the head

Another name of Debenture Redemption Fund Method is

Another name of Debenture Redemption Fund Method is

Every company required to create DRR shall on or before the 30th day of April in each year, invest or deposit, as the case may be, a sum which shall 7.5 not be less than, of the number of its debentures maturing during the year ending on the 31st day of March of the next year

Which of the following is not required to create Debenture Redemption Reserve?

Debentures Suspense Account

If the company acquires some assets from the vendor and instead of paying the vendor in cash, the company may allot debentures in payment of purchase consideration. In such case, if the face value of debentures issued is less than the value of assets acquired then the difference will be

If the company acquires some assets from the vendor and instead of paying the vendor in cash, the company may allot debentures in payment of purchase consideration. In such case, if the face value of debentures issued is more than the value of assets acquired then the difference will be

Which of the following is not a method of writing off discount on the issue of debentures?

Sound business policy demands that discount on the issue of debenture should be written off

Discount on issue of debentures, being a capital loss must be shown

Arrange the priority of payment in case of liquidation of the company:I. Preference shares holdersII. Secured creditorsIII. Equity shareholdersIV. Unsecured creditorsV. Debenture holders

Statement I:Debentures can be converted into shares as per the terms of the issue of debentures.
Statement II:Shares cannot be converted into debentures in any circumstances.

As a sound accounting policy when debentures are redeemed amount equal to

Profit on cancellation of debentures is transferred to

If debentures are issued at discount and redeemed at a premium

Debentures normally cannot be redeemed at

Debentures can be redeemed out of-

Debenture premium cannot be used

Tax deducted at source on interest on debenture is shown as

“Interest accrued & not due on debentures” is shown

“Interest accrued & due on debentures” is shown

Non convertible debentures refer to

When debentures are redeemable at different dates, the total amount of discount on the issue of debentures should be written off:

When debentures are issued as collateral security against any loan then the holder of such debentures is entitled to:

Discount on issue of debentures is a:

Which of the following is true with regard to 10% Debentures issued at a discount of 20%?

Interest on debentures is calculated on:

Which of the following statements is false?

Debentures can beI. Mortgage Debentures or Simple Debentures.II. Registered Debentures or Bearer Debentures.III. Redeemable Debentures or Irredeemable Debentures.IV. Convertible Debentures or Non-convertible DebenturesSelect the correct answer from the options given below.

When debentures are issued as collateral security, the final entry for recording the collateral debentures in the books is:

Which of the following is NOT a characteristic of Bearer Debentures?

Debenture interest

Which of the following statements is false?

Which of the following statements is FALSE?

Premium on redemption of debentures account appearing in the balance sheet is

Which of the following statements is TRUE?