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15. Glow Limited had taken a loan of ` 5,00,000 in June, 2023. The loan is to be repaid in 10 half yearly equal installments starting from December, 2023. Determine how the remaining loan will be classified in the Balance Sheet as on 31st March, 2024 as per Schedule III of the Companies Act, 2013?

Options

A` 3,50,000 is to be shown under the head 'Long term borrowings and ` 1,00,000 is to be shown under the head 'Short term borrowings"
B` 3,50,000 is to be shown under the head 'Long term borrowings and ` 75,000 is to be shown under the head "Short term borrowings" and ` 25,000 is to be shown under the head 'Other Current liabilities."
C` 4,50,000 is to be shown under the head 'Long term borrowings"
D` 3,50,000 is to be shown under the head 'Long term borrowings' and ` 1,00,000 is to be shown under the head 'Other Current liabilities." Answer Key MCQ No. Correct Option
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Correct Answer

✅ Option A — ` 3,50,000 is to be shown under the head 'Long term borrowings and ` 1,00,000 is to be shown under the head 'Short term borrowings"

All Options:

  • A` 3,50,000 is to be shown under the head 'Long term borrowings and ` 1,00,000 is to be shown under the head 'Short term borrowings" ✓
  • B` 3,50,000 is to be shown under the head 'Long term borrowings and ` 75,000 is to be shown under the head "Short term borrowings" and ` 25,000 is to be shown under the head 'Other Current liabilities."
  • C` 4,50,000 is to be shown under the head 'Long term borrowings"
  • D` 3,50,000 is to be shown under the head 'Long term borrowings' and ` 1,00,000 is to be shown under the head 'Other Current liabilities." Answer Key MCQ No. Correct Option

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Detailed Solution & Explanation

To classify the loan in the Balance Sheet as on 31st March, 2024 as per Schedule III:
1. Total Loan taken = ‘ 5,00,000\displaystyle `\,5,00,000.
2. Repaid in 10 half-yearly equal installments of ‘ 50,000\displaystyle `\,50,000 each starting December, 2023.
3. Remaining loan balance on 31st March, 2024: ‘ 5,00,000−‘ 50,000=‘ 4,50,000\displaystyle `\,5,00,000 - `\,50,000 = `\,4,50,000.
4. Out of the remaining balance, the installments due within 12 months (June 2024 and December 2024) are:
Current Maturities=‘ 50,000+‘ 50,000=‘ 1,00,000\text{Current Maturities} = `\,50,000 + `\,50,000 = `\,1,00,0005. Long-term portion due after 12 months is:
Long-term Borrowings=‘ 4,50,000−‘ 1,00,000=‘ 3,50,000\text{Long-term Borrowings} = `\,4,50,000 - `\,1,00,000 = `\,3,50,0006. Under the revised Schedule III, current maturities of long-term debt are classified under the head 'Short-term borrowings'.
Hence, **Option A** is the correct answer.

Key Concepts to Understand

Balance Sheet

A statement showing the financial position of a business at a particular date, listing all assets on one side and all liabilities and capital on the other side. It is not an account but a statement.

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