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CBSE Class 12-commerce Answered

In cash flow que no. 59 how we calculate intrest on debenture and intrest on loan.i m not getting additional information no.iii and iv 
Asked by Smitakhadayate20 | 15 Jan, 2019, 07:23: AM
answered-by-expert Expert Answer
In the given question:

Additional information no.(iii):
Debentures: It says that additional debentures of Rs.1,10,000 (2,60,000-1,50,000) were issued on 1st October,2017. This means that additional debentures of Rs.1,10,000 are used just for 6months (from Oct 2017 to Mar 2018) during the current year. Therefore, interest on debentures @8% will be charged as follows:
On amount used from Apr 2017 to Sept 2017 = 1,50,000 x 8% x 6/12 = 6,000
On amount used from Oct 2017 to Mar 2018 = 2,60,000 x 8% x 6/12 = 10,400
Therefore, total interest on debentures for current year = 6,000 + 10,400 = 16,400
Bank Loan: It is given that loan of Rs. 10,000 (50,000 - 40,000) was repaid on 1st October, 2017. This means that amount of loan used from Oct 2017 to Mar 2018 is just Rs.40,000. Accordingly, interest on bank loan will be calculated as follows:
On amount used from Apr 2017 to Sept 2017 = 50,000 x 8% x 6/12 = 2,000
On amount used from Oct 2017 to Mar 2018 = 40,000 x 8% x 6/12 = 1,600
Therefore, total interest on bank loan for current year = 2,000 + 1,600 = 3,600
 
Additional information no.(iv):
It is given that at the end of the year, i.e. on the last day of current year on 31.03.2018, preference shares of Rs.1,00,000 (3,00,000-2,00,000) were redeemed at 5% premium. Therefore, such amount of Preference Capital of Rs.1,00,000 will be shown as an outflow under Cash flow from financing activities. Also, since it is redeemed at premium, such amount of premium of Rs. 5,000 (1,00,000 x 5%) will be shown as an outflow under Cash flow from financing activities.
Answered by Surabhi Gawade | 15 Jan, 2019, 03:28: PM

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