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ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ?
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ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 10...
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ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 10...
Solution:
Given Information:
- ABC Ltd. purchased 5,000 debentures of Rs. 100 each.
- The debentures carry an interest rate of 9%.
- The purchase price per debenture is Rs. 95.
- The brokerage charges incurred for the purchase are Rs. 15,000.
Calculation:
Step 1: Calculate the total purchase cost of the debentures:
The total face value of the debentures is calculated as follows:
Total Face Value = Number of Debentures × Face Value per Debenture
Total Face Value = 5,000 × Rs. 100
Total Face Value = Rs. 500,000
The total purchase cost of the debentures is calculated as follows:
Total Purchase Cost = Number of Debentures × Purchase Price per Debenture
Total Purchase Cost = 5,000 × Rs. 95
Total Purchase Cost = Rs. 475,000
Step 2: Calculate the amount of interest paid:
The amount of interest paid is calculated as follows:
Interest Paid = Total Face Value × Interest Rate
Interest Paid = Rs. 500,000 × 9%
Interest Paid = Rs. 45,000
Step 3: Calculate the net cost of the debentures:
The net cost of the debentures is calculated as follows:
Net Cost = Total Purchase Cost + Brokerage Charges - Interest Paid
Net Cost = Rs. 475,000 + Rs. 15,000 - Rs. 45,000
Net Cost = Rs. 445,000
Step 4: Calculate the amount transferred to capital reserve:
The amount transferred to capital reserve is calculated as follows:
Amount Transferred to Capital Reserve = Total Purchase Cost - Net Cost
Amount Transferred to Capital Reserve = Rs. 475,000 - Rs. 445,000
Amount Transferred to Capital Reserve = Rs. 30,000
Explanation:
- The total face value of the debentures purchased is Rs. 500,000.
- The total purchase cost of the debentures is Rs. 475,000.
- The amount of interest paid on the debentures is Rs. 45,000.
- The net cost of the debentures is Rs. 445,000, taking into account the brokerage charges and interest paid.
- The amount transferred to the capital reserve is Rs. 30,000, which is the difference between the total purchase cost and the net cost of the debentures.
Conclusion:
The amount to be transferred to the capital reserve is Rs. 30,000.
Given Information:
- ABC Ltd. purchased 5,000 debentures of Rs. 100 each.
- The debentures carry an interest rate of 9%.
- The purchase price per debenture is Rs. 95.
- The brokerage charges incurred for the purchase are Rs. 15,000.
Calculation:
Step 1: Calculate the total purchase cost of the debentures:
The total face value of the debentures is calculated as follows:
Total Face Value = Number of Debentures × Face Value per Debenture
Total Face Value = 5,000 × Rs. 100
Total Face Value = Rs. 500,000
The total purchase cost of the debentures is calculated as follows:
Total Purchase Cost = Number of Debentures × Purchase Price per Debenture
Total Purchase Cost = 5,000 × Rs. 95
Total Purchase Cost = Rs. 475,000
Step 2: Calculate the amount of interest paid:
The amount of interest paid is calculated as follows:
Interest Paid = Total Face Value × Interest Rate
Interest Paid = Rs. 500,000 × 9%
Interest Paid = Rs. 45,000
Step 3: Calculate the net cost of the debentures:
The net cost of the debentures is calculated as follows:
Net Cost = Total Purchase Cost + Brokerage Charges - Interest Paid
Net Cost = Rs. 475,000 + Rs. 15,000 - Rs. 45,000
Net Cost = Rs. 445,000
Step 4: Calculate the amount transferred to capital reserve:
The amount transferred to capital reserve is calculated as follows:
Amount Transferred to Capital Reserve = Total Purchase Cost - Net Cost
Amount Transferred to Capital Reserve = Rs. 475,000 - Rs. 445,000
Amount Transferred to Capital Reserve = Rs. 30,000
Explanation:
- The total face value of the debentures purchased is Rs. 500,000.
- The total purchase cost of the debentures is Rs. 475,000.
- The amount of interest paid on the debentures is Rs. 45,000.
- The net cost of the debentures is Rs. 445,000, taking into account the brokerage charges and interest paid.
- The amount transferred to the capital reserve is Rs. 30,000, which is the difference between the total purchase cost and the net cost of the debentures.
Conclusion:
The amount to be transferred to the capital reserve is Rs. 30,000.
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ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ?
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ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ?.
ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC Ltd. purchased for cancellation its own 5,000, 9% debentures of 100 each for 95 per debenture. the brokerage charges 15,000 were incurred. calculate amount to be transferred to capital reserve ?.
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