
Question 18 Chapter 10 of +2-Part-1
18. (Amount of Profits to be Charged) West Ltd. issued 2,000, 10% debentures of Rs. 100 each at par, repayable after 5 years. It was decided to establish a Sinking Fund for their redemption and to invest it in the securities yielding 5% interest p.a. Reference to Sinking Fund Table shows that to get Re. 1 at the end of 5 years Rs. 0.180975 is to be invested. Calculate the amount of profits to be charged each year.
Computation of amount of profit to be charged each year
Amount of annual installment = Sinking fund table figure X Amount payable on redemption
i.e, 0.180975 Rs. 2,00,000 = ₹ 36,195
It all about Question 18 Chapter 10 of +2-Part-1, If you have any problem please comment below.
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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