How much amount will be shown in the financing activity for the cash flow statement prepared at the end if 12% opening debentures is ₹2,00,000 and closing 12% debentures is ₹1,60,000 and Interest on debentures is paid on half yearly basis on 30th September and 31st March each year, Debentures were redeemed on 30 Sept?
Answer & explanation
Correct answer: option 2
The correct answer is option2- Outflow ₹61,600.
Redemption of debentures = 2,00,000 - 1,60,000
= ₹40,000
Interest on debentures on 30 sept-
= 2,00,000 X 12/100 X 6/12
= ₹12,000
On 30 sept 40,000 debentures are redeemed so interest is calculated on remaining debentures.
Interest on debentures on 31 March-
= 1,60,000 X 12/100 X 6/12
= ₹9,600
Total outflow = Redeemed debenture + Interest on 30 Sept + Interest on 31 March
= 40,000 + 12,000 + 9,600
= ₹61,600