Question

Ernakulam Textiles Ltd. raised the following long term loans in 1st April, 2017:

$\begin{array}{cc}& \text{Rs.}\\ \text{60,000, 8\% Debentures of Rs. 100 each redeemable in}& \\ \text{four equal annual instalments beginning}& \\ \text{1st January, 2019}& 60,00,000\\ \text{12\% Bank Loan from Axis Bank repayable after 4 years}& 20,00,000\end{array}$
Interest on Debentures and Bank Loan has not yet been paid.
You are required to show the above items in the Balance Sheet of the Company as at 31st March, 2018

Answer 1

$\text{Ernakulam Textiles Ltd.}$
$\text{EXTRACT OF BALANCE SHEET as at 31st March, 2018}$
$\begin{array}{cccc}\text{Particulars}& \text{Note}& \text{31st}& \text{31st}\\ & \text{no.}& \text{March,}& \text{March,}\\ & & 2018& 2017\\ \text{1. EQUITY AND LIABILITIES:}& & \text{Rs.}& \text{Rs.}\\ \text{1. Non Current Liabilities}& & & \\ \text{(a) Long term Borrowings}& 1& 65,00,000& \\ \text{(b) Current Liabilities}& 2& & \\ \text{(c) Other Current Liabilities}& & 22,20,000& \\ & & \overline{\underset{–}{87,20,000}}& \end{array}$

Notes to Accounts:

$\begin{array}{cc}& \text{Rs.}\\ \text{(1) Long term Borrowings:}& \\ \text{45,000, 8\% Debentures of Rs. 10 each}& 45,00,000\\ \text{12\% Bank Laon}& \underset{–}{20,00,000}\\ & \underset{–}{\underset{–}{65,00,000}}\\ \text{(2) Other Current Liabilities:}& \\ \text{Current Maturities of Long-term Borrowings:}& \\ \text{15,000, 8\% Debentures of Rs. 100 each}& 15,00,000\\ \text{Interest accrued and due on Debentures}& 4,80,000\\ \text{Interest accrued and due on Bank Loan}& \underset{–}{2,40,000}\\ & \underset{–}{\underset{–}{22,20,000}}\end{array}$

Note : Current maturities of long term borrowings will be disclosed under 'Other Current Liabilities'. Current maturity means long term borrowings repayable within next 12 months from the date of Balance Sheet. Since debentures are repayable in four equal annual instalments, 1/4 of Rs.60,00,000 i.e, Rs.15,00,000 will become due for payment on 1st January 2019 i.e, withn 9 months from the date of Balance Sheet which as being prepared on 31st March, 2018.