Interest on Debentures will be:

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Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Accounting Ratios

Question:

On the basis of the following information, answer the question.

Particulars	Amount (₹)
Share Capital:
Equity share capital (₹10 each)	12,00,000
12% Preference share capital	3,00,000
Reserves & Surplus	5,00,000
10% Debentures	12,00,000
Current Liabilities	3,00,000
Fixed Assets	28,00,000
Current Assets	7,00,000
Net profit after tax as per Statement of Profit & Loss	4,50,000
Tax	1,50,000
Market Price of the Share	34

Interest on Debentures will be:

Options:

₹60,000

₹1,00,000

₹1,20,000

₹2,40,000

Correct Answer:

₹1,20,000

Explanation:

The correct answer is option 3- ₹1,20,000.

10% Debentures = 12,00,000

Interest on debentures = Debentures x rate of interest/100
= 12,00,000 x 10/100
= ₹1,20,000