If a company issue Rs. 1,00,000, 9% debentures of Rs. 100 each at discount of 5% but redeemable at premium of 5% then what amount will be debited to Loss on Issue of Debentures Account?

The correct option is Rs.10,000.

Let us break down the logical and accounting steps to understand why the Loss on Issue of Debentures Account is debited with Rs.10,000.
First, let us identify the key components from the given question:

1. Total nominal value (Face Value) of debentures issued:
$$\text{Face Value}=\text{Rs. 1,00,000}$$

2. Discount on issue of debentures: The debentures are issued at a discount of 5%. The discount amount is calculated on the face value of the debentures:
$$\text{Discount on Issue}=\text{Rs. 1,00,000}\times 5\%=\text{Rs. 5,000}$$

3. Premium on redemption of debentures: The debentures are redeemable at a premium of 5%. The redemption premium is also calculated on the face value of the debentures:
$$\text{Premium on Redemption}=\text{Rs. 1,00,000}\times 5\%=\text{Rs. 5,000}$$

According to standard accounting practices, when debentures are issued at a discount and are redeemable at a premium, both the discount on issue (which is a capital loss at the time of issue) and the premium on redemption (which is a liability that represents an future capital loss) are collectively recorded under the Loss on Issue of Debentures Account.
Therefore, the total amount debited to the Loss on Issue of Debentures Account is the sum of the discount on issue and the premium on redemption:

$$\text{Total Loss on Issue}=\text{Discount on Issue}+\text{Premium on Redemption}$$

$$\text{Total Loss on Issue}=\text{Rs. 5,000}+\text{Rs. 5,000}=\text{Rs. 10,000}$$

Thus, the amount debited to the Loss on Issue of Debentures Account is Rs.10,000.