Question

Venus Ltd. provides you with the following information:

1. ₹ 2,00,000 10% Debentures of ₹ 100 each issued at par on 1.07.2022 to be redeemed in a lump sum on 30.06.2026.
2. Interest is payable half-yearly, on 31st December and 30th June every year.
3. Interest on Debentures paid till 31.3.2023 is ₹ 3,000.

How will the interest on Debentures be shown under Other Current Liabilities in the notes to accounts accompanying the Balance Sheet of Venus Ltd. as at 31st March, 2023?

Options

• Interest accrued and due ₹ 17,000.

• Interest accrued but not due ₹ 5,000; interest accrued and due ₹ 7,000.

• Interest accrued but not due ₹ 10,000; interest accrued and due ₹ 2,000.

• Interest accrued but not due ₹ 17,000.

Answer 1

Interest accrued but not due ₹ 5,000; interest accrued and due ₹ 7,000.

Explanation:

Total debentures = `2,00,000 xx 10/100`

= ₹ 20,000.

Interest for 6 months (1 Jul–31 Dec 2022) = ₹ 10,000 (payable 31 Dec 2022). Only ₹ 3,000 has been paid by 31.3.2023.

So,

= ₹ 10,000 − ₹ 3,000

= ₹ 7,000 is accrued and due (unpaid past-due interest).

Interest for 3 months (1 Jan–31 Mar 2023) = ₹ 5,000 (next payment due 30 June 2023)