Accounting Multiple Choice Question – 8 September 2024

Alex plc is finalising certain figures that will appear in its financial statements as at 30 April 2024.

Relevant initial trial balance figures are as follows:

• Trade and other payables (excluding interest payable)  £246,800
• 6% debentures as at 1 May 2023  £400,000

Alex plc issued 6% debentures of £120,000 at par on 1 February 2024, repayable at par in ten years’ time.  No interest was outstanding at 1 May 2023, and the company paid interest in respect of debentures of £24,000 in the period to 30 April 2024.

What will be the value of trade and other payables figure (NOW including interest payable) that will appear in Alex plc’s statement of financial position as at 30 April 2024?

Select ONE answer:

1. £222,800
2. £246,800
3. £248,600
4. £272,600

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 3

1. Not correct
2. Not correct
3. Correct == > Total interest charge for the year should be the total of original debentures (£400,000 × 6%) = £24,000 (i.e. cash paid) + new debentures (£120,000 × 6% × 3/12) = £1,800) for a total interest in the I/S for the year of £25,800 == > Therefore the closing accrual should be £1,800, giving a total trade and other payables total of (246,800 + 1,800) = £248,600
4. Not correct

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