Question 17 Chapter 10 of +2-Part-1
17. (Journal/Ledger) A Company issued 5,000, 9% debentures, of 10 each on 1st Jan., 2016, repayable after 3 years. It was decided to set up a sinking fund for the purpose of redeeming these debentures. Sinking Fund table revealed that an amount of Rs. 0.3,17,208 set aside every year and invested in 5% securities would yield Rs. 1 after three years.
On 31st December, 2018 the debentures were redeemed.
Give Journal entries and prepare necessary accounts.
The solution of Question 17 Chapter 10 of +2 Part-1:-
For ₹ 1 The amount of investment is = 0.317208
For ₹ 50,000 The amount of investment will be = 0.317208 X 50,000 = ₹ 15,860.40
| Journal |
|||||
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
| 2016 | |||||
| Jan. 1 | Bank A/c | Dr. | 50,000 | ||
| To 9% Debenture A/c | 50,000 | ||||
| (Being debentures issued) | |||||
| Dec. 31 | P & L Appropriation A/c | Dr. | 15,860.40 | ||
| To Debenture Sinking fund A/c | 15,860.40 | ||||
| (Being amount transferred to debentures S.F. A/c) | |||||
| Dec. 31 | Debentures S.F. Investment A/c | Dr. | 15,860.40 | ||
| To Bank A/c | 15,860.40 | ||||
| (Being amount of debentures S.F. invested) | |||||
| 2017 | |||||
| Dec. 31 | Bank A/c | Dr. | 793.02 | ||
| To Interest on Investment A/c | 793.02 | ||||
| (Being interest on investment received) | |||||
| Dec. 31 | Interest on investment A/c | Dr. | 793.02 | ||
| To Debentures S.F. A/c | 793.02 | ||||
| (Being interest transferred to debentures S.F. A/c) | |||||
| Dec. 31 | P & L Appropriation A/c | Dr. | 15,860.40 | ||
| To Debenture Sinking fund A/c | 15,860.40 | ||||
| (Being amount transferred to debentures S.F. A/c) | |||||
| Dec. 31 | Debentures S.F. Investment A/c | Dr. | 16,653.42 | ||
| To Bank A/c | 16,653.42 | ||||
| (Being amount of debentures S.F. invested) | |||||
| 2018 | |||||
| Dec. 31 | Bank A/c | Dr. | 1,625.69 | ||
| To Interest on Investment A/c | 1,625.69 | ||||
| (Being interest on investment received) | |||||
| Dec. 31 | Interest on investment A/c | Dr. | 1,625.69 | ||
| To Debentures S.F. A/c | 1,625.69 | ||||
| (Being interest transferred to debentures S.F. A/c) | |||||
| Dec. 31 | P & L Appropriation A/c | Dr. | 15,860.49 | ||
| To Debenture Sinking fund A/c | 15,860.49 | ||||
| (Being amount transferred to debentures S.F. A/c) | |||||
| Dec. 31 | Debentures S.F. Investment A/c | Dr. | 32,513.82 | ||
| To Bank A/c | 32,513.82 | ||||
| (Being amount of debentures S.F. invested at par value ) | |||||
| Dec. 31 | 9 % Debenture A/c | Dr. | 50,000 | ||
| To Bank A/c | 50,000 | ||||
| (Being debentures redeemed) | |||||
| Dec. 31 | Debentures S.F. A/c | Dr. | 50,000 | ||
| To General Reserve A/c | 50,000 | ||||
| (Being balance of debentures S.F. transferred to General Reserve A/c ) | |||||
9% Debentures Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Dec. 31 | To Balance c/d | 50,000 | Jan. 1 | By Bank A/c | 50,000 |
| 50,000 | 50,000 | ||||
| 2017 | 2017 | ||||
| Dec. 31 | To Balance c/d | 50,000 | Jan. 1 | By Balance b/d | 50,000 |
| 50,000 | 50,000 | ||||
| 2018 | 2018 | ||||
| Dec. 31 | To Bank A/c | 50,000 | Jan. 1 | By Balance b/d | 50,000 |
| 50,000 | 50,000 |
Debentures Sinking Fund Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Dec. 31 | To Balance c/d | 15,860.40 | Dec. 31 | By P & L App. A/c | 15,860.40 |
| 15,860.40 | 15,860.40 | ||||
| 2017 | 2017 | ||||
| Jan. 1 | By Balance b/d | 15,860.40 | |||
| Dec. 31 | By Interest A/c | 793.02 | |||
| Dec. 31 | To Balance c/d | 32,513.82 | By P & L App. A/c | 15,860.40 | |
| 32,513.82 | 32,513.82 | ||||
| 2018 | 2018 | ||||
| Jan. 1 | By Balance b/d | 32,513.82 | |||
| Dec. 31 | By Interest A/c | 1,625.69 | |||
| Dec. 31 | To General Reserve A/c | 50,000.00 | Dec. 31 | By P & L App. A/c | 15,860.49 |
| 50,000.00 | 50,000.00 |
Debentures Sinking Fund Investment Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2016 | 2016 | ||||
| Dec. 31 | To Bank A/c | 15,860.40 | Dec. 31 | By Balance c/d | 15,860.40 |
| 15,860.40 | 15,860.40 | ||||
| 2017 | 2017 | ||||
| Jan. 1 | To Balance b/d | 15,860.40 | Dec. 31 | By Balance c/d | 32,513.82 |
| Dec. 31 | To Bank A/c | 16,653.42 | |||
| 32,513.82 | 32,513.82 | ||||
| 2018 | 2018 | ||||
| Jan. 1 | To Balance b/d | 32,513.82 | Jan. 1 | By Bank A/c | 32,513.82 |
| 32,513.82 | 32,513.82 |
Interest Investment Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2017 | 2017 | ||||
| Dec. 31 | To D.S. fund A/c | 793.02 | Dec. 31 | By Bank A/c | 793.02 |
| 793.02 | 793.02 | ||||
| 2018 | 2018 | ||||
| Dec. 31 | To D.S. fund A/c | 1,625.69 | Dec. 31 | By Bank A/c | 1,625.69 |
| 1,625.69 | 1,625.69 |
General Reserve Account
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2018 | 2018 | ||||
| Dec. 31 | To Balance c/d | 50,000 | Dec. 31 | By D.S. fund A/c | 50,000 |
| 50,000 | 50,000 |
Note: (i) There is an adjustment of 9 paise in the P & L Appropriation A/c in the last year.
Advertisement-X
(ii) Normally amount is not invested in the last year.
It all about Question 17 Chapter 10 of +2-Part-1, If you have any problem please comment below.
Redemption of Debentures – explained with an example
End of Solution
Check Out the Solution of all questions of this chapter:
The solution to all questions of Chapter No. 10 – Company Accounts (Redemption of Debentures) Class 12 Usha Publication – 2024 is shown as follows, click on the image of the question to get the solution.
Thanks for completing the chapter. If you understand the question or we have helped you with your homework, please share our website on your social media. We are delighted to help you out.
Thanks again.
End of Post
Download a PDF of Chapter No. 10 – Company Accounts (Redemption of Debentures):
If you want to download a PDF of this chapter then you can do it. Check out our PDF file on our Store page.
Chapter-Wise Solution of Usha Publication Accountancy – Part 2 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 2 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 8 – Company Accounts (Share Capital)
Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
Chapter No. 11 – Financial Statements of a Company
Advertisement-X
Chapter No. 12 – Financial Statement Analysis
Chapter No. 13 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 14 – Accounting Ratios
Chapter No. 15 – Cash Flow Statement
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 2 Class 12 by Unimax Publication
- Chapter No. 1 – Company Accounts (Share Capital)
- Chapter No. 2 – Issue of Debentures
- Chapter No. 3 – Redemption of Debentures
- Chapter No. 4 – Financial Statements of a Company (Balance Sheet Only)
- Chapter No. 5 -Financial Statement Analysis
- Chapter No. 6 – Tools/Methods of Financial Analysis
- Chapter No. 7 – Ratio Analysis
- Chapter No. 8 – Cash Flow Statement
Check out Part 1 of both books.
In Class 12th the accountancy has 2 books i.e. Part 1 and Part 2. The Books related to the Part 1 are shown above. but If you want to know more about Part 1, you can check it out from the following links. We have provided the links to both books i.e. Accountancy Part 1 by Usha Publication and Advanced Accountancy Part 2 by Unimax Publication.
1. Accountancy – Part 1 Class 12 – Session 2024-25 By Usha Publication
2. Advanced Accountancy Part 1 Class 12 by Unimax Publication
Advertisement-Y