Question

Balance Sheet (Extract)

Liabilities	31-03-2019 (₹)	31-03-2020 (₹)
12% debentures	2,00,000	1,60,000

Additional Information:

Interest on debentures is paid on half yearly basis on 30^th September and 31^st March each year.

Debentures were redeemed on 30^th September, 2019.

How much amount (related to above information) will be shown in Financing Activity for Cash Flow Statement prepared on 31^st March, 2020?

Options

• Outflow ₹ 40,000

• Inflow ₹ 42,600

• Outflow ₹ 61,600

• Outflow ₹ 64,000

Answer 1

Outflow ₹ 61,600

Explanation:

Cash flow from financing activities:

Redemption of debentures	₹ 40,000
Interest on debentures	₹ 21,600
	₹ 61,600

Interest on debentures:

= `1,60,000 xx 12/100 + 40,000 xx 12/100 xx 6/100`

= ₹ 19,200 + ₹ 2,400

= ₹ 21,600