Day: August 20, 2024

As at 30 June 2023 Alex plc had £1m 8% loan notes in issue, interest being paid half-yearly on 30 June and 31 December each year.

On 30 September 2023, the company redeemed £250,000 of these loan notes at par, paying interest due up to that date.

On 1 April 2024 Alex plc issued £500,000 7% loan notes at par, interest payable half-yearly on 31 March and 30 September.

What figure should appear in the company’s income statement for finance costs in the year ended 30 June 2024?

Select ONE answer:

1. £88,750
2. £82,500
3. £65,000
4. £73,750

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct –> July – September 1,000,000 × 8% × 3/12 + October – March 750,000 × 8% × 6/12 + April – June 750,000 × 8% × 3/12 & 500,000 x 7% x 3/12

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