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Answer -
Debentures can be issued in three ways: at par, premium and at discount while the debentures can be redeemed only at par and at premium. The following combinations can be discussed:
1. Issued at Par and Redeemable at Par: This is the condition when debentures are issued and redeemed at their par value or face value. The following entries can be seen
2. Issued at Premium and Redeemable at Par: A situation where debenture is issued at premium and is redeemable at par. Issuing debentures at premium is gain, so it is credited.
3. Issue at Discount and Redeemable at Par: The situation in which debenture is issued at a discount and is redeemable at par. Discount being a loss is recorded as a debit entry.
4. Issue at Par and Redeemable at Premium: Here the share is issued at par and is redeemable at premium. The following entries are recorded
5. Issued at Premium and Redemption at Premium: In this situation both the issue and redemption of the debenture is at premium. It will give rise to following entries
6. Issue of Discount and Redemption at Premium: When debentures are issued at discount and redeemable at premium. The following entries can be recorded