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JAMB Principles of Accounts 2005 Question 45

Question 45

Company Accounts

A company paid cash in redemption of ₦10 000 debenture. The accounting entry to record this will be to debit

  1. A.cash and credit debenture
  2. B.debenture and credit cash
  3. C.cash and credit capital
  4. D.capital and debit cash
Show the answer and explanation

Answer: B (debenture and credit cash)

Explanation

Paying off the debt reduces the debenture liability (debit) and cash (credit).