# Debenture Accounts MCQ

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Debentures Accounts MCQ

1. In 2001, a company issued 5, 000, 7.5% Debentures of Rs. 10. On 1st March, 2008, it purchased 500 of its Own Debentures at Rs.47,000 cum-interest. It was held as investment upto 30th June, 2008. Interest is payable half yearly on 30th June and on 31st December. Calculate the amount of the interest to be debited to Interest A/c.
a. Rs. 625
b. Rs. 937.5
c. Rs. 3,125
d. None of the above.
Interest on 500 debentures accrued for 2 months (January- February) = [50,000 x7.5%x2/12]=625. So, option (a) is correct
2. In 2001, a company issued 5, 000, 7.5% Debentures of Rs.10. On 1st March, 2008, It purchased 500 of its Own Debentures at Rs.47,000 cum-interest. It was held as investment upto 30th June, 2008. Interest is payable half yearly on 30th June and on 31st December. Calculate the amount payable for Own Debentures
a. Rs. 47,000
b. Rs. 44,500
c. Rs. 46,375
d. None of the above
Interest on 500 debentures accrued for 2 months (January- February) = [50,000 x7.5%x2/12]=625.
As it was purchased on cum interest, it includes the accrued interest upto the date of purchase.
Therefore, actual price payable on Own Debenture Rs.(47,000-625)= Rs.46,375
The amount to be debited to Own Debenture A/c. So, option (c ) is correct
3. A Company buys its own 12% Debenture from the market at Rs.98 cum-interest, 3 months after the previous date of payment of debenture interest. The actual cost of own debenture to the company is-
a. Rs. 98
b. Rs. 97
c. Rs. 95
d. Rs. 94
Actual cost of the debentures to the company=98-(100 x 3/12 x 12%)=Rs. 95. So, option (c ) is correct.