If debentures are converted into equity shares, it is a/an: _____
Important Questions on Issue and Redemption of Debentures
Based on the following, answer the question:
XYZ Ltd. has been operating in the field of FMCG products in the South Indian market. However, to expand its operation in the northern part of India, it needs additional capital ₹20,00,000 which is raised by issuing 10% Debenture of ₹12,00,000 of ₹100 issued at a discount of 10% to be repayable after 6 years. The rest of the funds is raised by issuing 5% debenture of ₹8,00,000 of ₹100 issued at 15% premium. These debentures are perpetual in nature. After six years of successful operation in northern India, the company took a loan of ₹5,00,000 from PNB against 5% debenture of ₹8,00,000 of ₹100 each as a collateral security. The company successfully ran its operation and managed to pay off its loan within two years.
Company raised a loan of ₹5,00,000 from PNB against 5% debenture of ₹8,00,000 of ₹100 each as collateral security. The "Debenture suspense A/c" will be debited with:
