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On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?
- a)Rs.2,80,000
- b)Rs.2,33,333
- c)Rs.3,36,000
- d)Rs.2,56,667
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
On May 01, 2003, Y Ltd. issued 7% 40,000 convertible debentures of Rs....
Calculation of Interest Expenditure on Convertible Debentures
Issue Details:
- Face value of debenture = Rs.100
- Premium on debenture = 20%
- Interest rate on debenture = 7%
- Total amount of debentures issued = Rs.40,000
Calculation of Interest Expense:
Step 1: Calculation of Total Interest Payable
- Interest payment frequency = Half-yearly
- Interest rate = 7%
- Face value of debenture = Rs.100
- Number of debentures issued = 40,000
Interest payable per debenture per half-year = (7/2)% * Rs.100 = Rs.3.50
Total interest payable on 40,000 debentures for 1 year = 2 * (40,000 * Rs.3.50) = Rs.2,80,000
Step 2: Allocation of Interest Expense
- Date of issue = May 01, 2003
- Financial year ends on March 31, 2004
Interest runs from the date of issue, i.e., May 01, 2003 to March 31, 2004. Therefore, the interest expense for the year ended March 31, 2004 will be calculated as follows:
- Number of months from May 01, 2003 to March 31, 2004 = 11 months
- Total interest payable for 1 year = Rs.2,80,000 (as calculated in Step 1)
- Interest payable for 11 months = (11/12) * Rs.2,80,000 = Rs.2,56,667 (rounded off to nearest rupee)
Therefore, the amount of interest expenditure debited to the profit and loss account for the year ended March 31, 2004 is Rs.2,56,667.
Issue Details:
- Face value of debenture = Rs.100
- Premium on debenture = 20%
- Interest rate on debenture = 7%
- Total amount of debentures issued = Rs.40,000
Calculation of Interest Expense:
Step 1: Calculation of Total Interest Payable
- Interest payment frequency = Half-yearly
- Interest rate = 7%
- Face value of debenture = Rs.100
- Number of debentures issued = 40,000
Interest payable per debenture per half-year = (7/2)% * Rs.100 = Rs.3.50
Total interest payable on 40,000 debentures for 1 year = 2 * (40,000 * Rs.3.50) = Rs.2,80,000
Step 2: Allocation of Interest Expense
- Date of issue = May 01, 2003
- Financial year ends on March 31, 2004
Interest runs from the date of issue, i.e., May 01, 2003 to March 31, 2004. Therefore, the interest expense for the year ended March 31, 2004 will be calculated as follows:
- Number of months from May 01, 2003 to March 31, 2004 = 11 months
- Total interest payable for 1 year = Rs.2,80,000 (as calculated in Step 1)
- Interest payable for 11 months = (11/12) * Rs.2,80,000 = Rs.2,56,667 (rounded off to nearest rupee)
Therefore, the amount of interest expenditure debited to the profit and loss account for the year ended March 31, 2004 is Rs.2,56,667.
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On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer?
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On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct 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, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct 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, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer?.
On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct 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, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct 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, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer?.
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Here you can find the meaning of On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer?, a detailed solution for On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice On May 01, 2003, Y Ltd. issued 7% 40,000 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, 2004 = ?a)Rs.2,80,000b)Rs.2,33,333c)Rs.3,36,000d)Rs.2,56,667Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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