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On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?
  • a)
    Rs.70,000
  • b)
    Rs.58,333
  • c)
    Rs.84,000
  • d)
    Rs.64,167
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.1...
Calculation of Interest Expenditure on Convertible Debentures

Issued Debentures: 10,000
Face Value of Debentures: Rs.100
Total Value of Debentures: 10,000 x 100 = Rs.10,00,000

Premium on Debentures: 20%
Premium Amount: 10,00,000 x 20% = Rs.2,00,000

Total Amount Received: 10,00,000 + 2,00,000 = Rs.12,00,000

Interest Rate: 7%
Interest Amount: 12,00,000 x 7% = Rs.84,000

Interest Payment Schedule: September 30 and March 31

Interest for the Year Ended March 31, 2005

Interest for the period May 01, 2004 to March 31, 2005:
= [(10 months/12) x 84,000] = Rs.70,000

Therefore, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 is Rs.64,167.
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Community Answer
On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.1...
The total interest for the year is
total amount of shares (F.V.) = 10000×100
= 10,00,000
total interest for the year= 10,00,000× 7/100
= 70000
The year started from 1 may, so the interest will be charged for 11 months, i.e, 70000×11/12
= 64166.66
or
= 641667
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On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer?
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On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer?.
Solutions for On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer?, a detailed solution for On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice On May 01, 2004 U Ltd. issued 7% 10,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended March 31, 2005 = ?a)Rs.70,000b)Rs.58,333c)Rs.84,000d)Rs.64,167Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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