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T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will be
- a)Rs. 70,000 shown under current liabilities
- b)Rs. 2,10,000 under current liabilities
- c)Rs. 1,40,000 shown along with Debentures
- d)Rs. 2,80,000 under current liabilities
Correct answer is option 'A'. Can you explain this answer?
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T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% ...
Calculation of Interest Accrued but not Due
- Face Value of Debentures = Rs. 20,00,000
- Discount on Issue = 10% of Face Value = Rs. 2,00,000
- Issue Price = Face Value - Discount = Rs. 18,00,000
- Interest Rate = 14%
- Half-Yearly Interest = 14%/2 = 7%
- Interest for 1 Year = 7% of Issue Price = 7% of Rs. 18,00,000 = Rs. 1,26,000
- Interest for 2 Years = Rs. 1,26,000 x 2 = Rs. 2,52,000
- Less: Interest Paid = Rs. 1,40,000 (for 1st year) + Rs. 1,40,000 (for 2nd year) = Rs. 2,80,000
- Interest Accrued but not Due = Rs. 2,52,000 - Rs. 2,80,000 = Rs. (-28,000) (Negative)
Explanation
- T Ltd. issued debentures of Rs. 20,00,000 at a discount of 10% on April 01, 2008.
- The issue price of debentures was Rs. 18,00,000 (face value minus discount).
- The debentures carry an interest rate of 14% per annum, payable half-yearly on June 30 and December 31 every year.
- The interest for the first year (April 01, 2008 to March 31, 2009) would be Rs. 1,26,000 (7% of issue price).
- Similarly, the interest for the second year (April 01, 2009 to March 31, 2010) would also be Rs. 1,26,000.
- The total interest payable for two years would be Rs. 2,52,000 (Rs. 1,26,000 x 2).
- However, the company has paid only Rs. 1,40,000 as interest for each year, totaling Rs. 2,80,000.
- Hence, the interest accrued but not due as on March 31, 2010, would be negative (i.e., Rs. -28,000).
- This negative amount would be shown as a deduction from the amount of interest payable in the Balance Sheet, and therefore, the correct option is (A), i.e., Rs. 70,000 shown under current liabilities.
- Face Value of Debentures = Rs. 20,00,000
- Discount on Issue = 10% of Face Value = Rs. 2,00,000
- Issue Price = Face Value - Discount = Rs. 18,00,000
- Interest Rate = 14%
- Half-Yearly Interest = 14%/2 = 7%
- Interest for 1 Year = 7% of Issue Price = 7% of Rs. 18,00,000 = Rs. 1,26,000
- Interest for 2 Years = Rs. 1,26,000 x 2 = Rs. 2,52,000
- Less: Interest Paid = Rs. 1,40,000 (for 1st year) + Rs. 1,40,000 (for 2nd year) = Rs. 2,80,000
- Interest Accrued but not Due = Rs. 2,52,000 - Rs. 2,80,000 = Rs. (-28,000) (Negative)
Explanation
- T Ltd. issued debentures of Rs. 20,00,000 at a discount of 10% on April 01, 2008.
- The issue price of debentures was Rs. 18,00,000 (face value minus discount).
- The debentures carry an interest rate of 14% per annum, payable half-yearly on June 30 and December 31 every year.
- The interest for the first year (April 01, 2008 to March 31, 2009) would be Rs. 1,26,000 (7% of issue price).
- Similarly, the interest for the second year (April 01, 2009 to March 31, 2010) would also be Rs. 1,26,000.
- The total interest payable for two years would be Rs. 2,52,000 (Rs. 1,26,000 x 2).
- However, the company has paid only Rs. 1,40,000 as interest for each year, totaling Rs. 2,80,000.
- Hence, the interest accrued but not due as on March 31, 2010, would be negative (i.e., Rs. -28,000).
- This negative amount would be shown as a deduction from the amount of interest payable in the Balance Sheet, and therefore, the correct option is (A), i.e., Rs. 70,000 shown under current liabilities.
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T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer?
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T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer?.
T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer?.
Solutions for T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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ample number of questions to practice T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2010, the amount shown as “interest accrued but not due” in the Balance Sheet will bea)Rs. 70,000 shown under current liabilitiesb)Rs. 2,10,000 under current liabilitiesc)Rs. 1,40,000 shown along with Debenturesd)Rs. 2,80,000 under current liabilitiesCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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