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F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%.
The debenture account was credited with ______.
  • a)
    Rs.4,00,000
  • b)
    Rs.5,00,000
  • c)
    Rs.3,20,000
  • d)
    Rs.4,80,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,...
Solution:

Given,
Book value of Machinery = Rs.4,00,000
Consideration paid by issue of 10% Debentures of Rs.100 each at a discount of 20%.

Let's calculate the number of debentures issued:
Consideration paid = Book value of Machinery
Let the number of debentures issued be 'x'.
Then,
x * 100 * 80/100 = 4,00,000
x = 5,00,000/100
x = 5000

The debenture account was credited with:
The face value of each debenture = Rs.100
The number of debentures issued = 5000
So,
Face value of debentures issued = 100 * 5000 = Rs.5,00,000

Therefore, the correct option is B) Rs.5,00,000.
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Community Answer
F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,...
The Accounting treatment for the above situation is as follows:
1. Machinery a/c Dr. 4,00,000


To G Company a/c 4,00,000
[being machinery purchased from G company]


2.G company a/c Dr. 4,00,000
Discount on issue of debenturesa/c Dr. 1,00,000


To 10% Debenturesa/c 5,00,000
[being payment through issue of 5,000 debentures]


WORKING NOTES : -

Number of debentures to be issued =

Worth of debentures/ Issue price(excluding discount)

= 4,00,000/80
=5,000 debentures

Discount on issue =5,000*20 =1,00,000

So, the amount cresited to 10% debentures =

4,00,000+1,00,000

=5,00,000
Hence, option B is correct.
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F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%.The debenture account was credited with ______.a)Rs.4,00,000b)Rs.5,00,000c)Rs.3,20,000d)Rs.4,80,000Correct answer is option 'B'. Can you explain this answer?
Question Description
F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%.The debenture account was credited with ______.a)Rs.4,00,000b)Rs.5,00,000c)Rs.3,20,000d)Rs.4,80,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%.The debenture account was credited with ______.a)Rs.4,00,000b)Rs.5,00,000c)Rs.3,20,000d)Rs.4,80,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%.The debenture account was credited with ______.a)Rs.4,00,000b)Rs.5,00,000c)Rs.3,20,000d)Rs.4,80,000Correct answer is option 'B'. Can you explain this answer?.
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