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In cash flow que no 57 I m not getting the accounting treatment of additional information fron (iv ) to (viii) pls help me in it to solve

Asked by Smitakhadayate20 9th January 2019, 7:32 PM
Answered by Expert
Answer:
Additional information no (iv):
From the Balance Sheet of the company, it is evident that there is a increase in the amount of debentures of Rs.1,00,000 (3,00,000-2,00,000) from 2017 to 2018. Also, it is clearly mentioned in the additional information that such increase is on account of debentures being issued on 1st April, 2017 which is the first day of the current financial year 2017-2018. It means that the total amount of debentures of Rs.3,00,000 is available for use from the very first day of the current accounting year starting from 1st April 2017 to 31st March 2018.
Therefore, interest on such debentures will be calculated on such total amount of Rs.3,00,000 for all 12 months during 2017-18 as follows:
Interest = 3,00,000 x 10% x 12/12 = 30,000

Additional information no (v): 
This information is provided to determine the amount of interest on investment to be considered in the cash flow statement. Since, the additional investment of Rs.1,00,000 (2,00,000-1,00,000) was purchased on the last day of the current accounting year, such additional investement will not be entitled to any interest for the current accounting year. Therefore, interest on investment for the current year is 1,00,000 x 10% x 12/12 = 10,000

Additional information no (vi):
It is given that preference dividend of Rs.1,00,000 (Rs. 3,00,000 - 2,00,000) were redeemeed on 31st December, 2017 which means that preference shares will be entitled to dividend on the entire amount of Rs.3,00,000 which is the opening balance for the current accounting year. Dividend on the same will be calculated at the rate of 10% on Rs.3,00,000 which comes to Rs.30,000.

Additional information no (vii) and (viii): It is evident from the information that there has been a fresh issue of equity shares of Rs.2,00,000 (5,00,000 - 3,00,000). In information number (viii) it is mentioned that the fresh issue was done on 31st March, 2018 which is the last day of the current accounting year. Therefore, amount of share capital available for use during the accounting year is Rs. 3,00,000 only. If interim dividend is paid on 31st December during the current year it will be paid only on this Rs.3,00,000 at the given rate of 15% which is Rs.45,000. 

Answered by Expert 10th January 2019, 2:50 PM
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