Question

Balance Sheet (Extract)

Equity and liabilities 31-3-2019 31-3-2020
12% Debentures 2,00,000 1,60,000

Additional Information:

Interest on debentures is paid on half yearly basis on 30th September and 31st March each year. Debentures were redeemed on 30th September 2019.

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

(a) Outflow Rs. 40,000.

(b) Inflow Rs. 42,600.

(c) Outflow Rs. 61,600.

(d) Outflow Rs. 64,000

Answer 1

The amount shown in the Financing Activity for the Cash Flow Statement prepared on March 31, 2020, related to the redemption of debentures is an outflow of Rs. 64,000. Therefore, the correct option is D.

Step-by-step explanation:

In the Cash Flow Statement, the amount related to the redemption of debentures will be shown as an outflow in the Financing Activity section.

Since the debentures were redeemed on September 30, 2019, the interest payment made on March 31, 2020, will not be considered. Therefore, the amount to be shown in the Financing Activity for the Cash Flow Statement prepared on March 31, 2020, would be the principal amount of the debentures redeemed, which is Rs. 1,60,000.

So, the correct answer would be option (d) Outflow Rs. 64,000.