Brinda Ltd., has furnished the following information: (a) 25,000, 10% debentures of Rs.100 each; (b) Bank Loan of Rs.10,00,000 repayable after 5 years; (c) Interest on debentures is yet to be paid. Show the above items in the balance sheet of the company as at March 31, 2017.
Balance Sheet of Brinda Ltd. as at March 31, 2017
| Particulars | Note No. | Amount (Rs.) |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Non-current Liabilities | ||
| a) Long-term borrowings | 1 | 35,00,000 |
| 2. Current Liabilities | ||
| a) Other current liabilities | 2 | 2,50,000 |
Notes to Accounts
Note 1: Long-term borrowings
| Particulars | Amount (Rs.) |
|---|---|
| 10% Debentures | 25,00,000 |
| Bank Loan | 10,00,000 |
| Total | 35,00,000 |
Note 2: Other current liabilities
| Particulars | Amount (Rs.) |
|---|---|
| Interest accrued on debentures | 2,50,000 |
| Total | 2,50,000 |
Explanation
This question tests the student's ability to classify and present financial items in a balance sheet as per Schedule III of Companies Act, 2013. The 10% Debentures (25,000 × Rs. 100 = Rs. 25,00,000) and Bank Loan (Rs. 10,00,000) are both repayable after more than 12 months, hence classified as Long-term borrowings under Non-current Liabilities. The accrued interest on debentures (Rs. 25,00,% = Rs. 2,50,000) is a current liability since it is yet to be paid and falls under Other current liabilities.
Solution Steps
Step 1: Calculate value of 10% Debentures = 25,000 × Rs. 100 = Rs. 25,00,000
Step 2: Identify Bank Loan = Rs. 10,00,000 (repayable after 5 years - non-current)
Step 3: Calculate Interest on Debentures = Rs. 25,00,% = Rs. 2,50,000 (accrued but not paid)
Step 4: Classify Debentures and Bank Loan under Long-term borrowings (Non-current Liabilities)
Step 5: Classify Accrued Interest under Other current liabilities (Current Liabilities)