Question 21 Chapter 10 of +2-Part-1 - USHA Publication 12 Class Part

Question 21 Chapter 10 of +2-Part-1

21. (Ledger Accounts/Sinking Fund/Sinking Fund Investment) X and Co. Ltd. issued 1.000 6% debentures of Rs. 100 each repayable at the end of 5 years. It was resolved to establish a Sinking Fund for the purpose. Show the ledger accounts for the five years, assuming that interest received on the investments representing the Sinking Fund was at the rate of 5 percent on the cost, that the interest was received yearly and immediately invested (ignore income tax) and that the sale proceeds of the investments to repay the debentures realised 96 per cent.
Referring to the table shows that Re. 0.180975 invested at the end of each year at 5 per cent compound interest will produce Re. 1 at the end of five years.
Show relevant ledger account

The solution of Question 21 Chapter 10 of +2 Part-1:-

Solution of Questions 19 20 & 21 Redemption of Debentures Chapter 10 Accounts class 12 PSEB Day 207

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9% Debentures Account

Date	Particulars	₹	Date	Particulars	₹
1^st	To Balance c/d	1,00,000	1^st	By Debenture App. & All. A/c	1,00,000
		1,00,000			1,00,000

2^nd	To Balance c/d	1,00,000	2^nd	By Balance b/d	1,00,000
		1,00,000			1,00,000

3^rd	To Bank A/c	1,00,000	3^rd	By Balance b/d	1,00,000
		1,00,000			1,00,000

4^th	To Balance c/d	1,00,000	4^th	By Balance b/d	1,00,000
		1,00,000			1,00,000

5^th	To Debentures holders A/c	1,00,000	5^th	By Balance b/d	1,00,000
		1,00,000			1,00,000

Debentures Sinking Fund Account

Date	Particulars	₹	Date	Particulars	₹
1^st	To Balance c/d	18,097.50		By Statement Profit & loss	18,097.50
		18,097.50			18,097.50

2^nd	To Balance c/d	37,099.87	2^nd	By Balance b/d	18,097.50
				By Interest on S.F. Investment A/c	904.87
				By Statement Profit & loss	18,097.50
		37,099.87			37,099.87

3^rd	To Balance c/d	57,052.37	3^rd	By Balance b/d	37,099.87
				By Interest on S.F. Investment A/c	1855.0
				By Statement Profit & loss	18,097.50
		57,052.37			57,052.37

4^th	To Balance c/d	78,002.76	4^th	By Balance b/d	57,052.37
				By Interest on S.F. Investment A/c	2,852.62
				By Statement Profit & loss	18,097.50
		78,002.76			78,002.76

5^th	To Sinking Fund Investment A/c	3,120.10	5^th	By Balance b/d	78,002.76
	To General Reserve A/c	96,880.01		By Interest on S.F. Investment A/c	3,900.12
				By Statement Profit & loss	18,097.50
		1,00,000.11			1,00,000.11

Sinking Fund Investment Account

Date	Particulars	₹	Date	Particulars	₹

1^st	To Bank A/c	18,097.50	1^st	By Balance c/d	18,097.50
		18,097.50			18,097.50

2^nd	To Balance b/d	18,097.50	2^nd	By Balance c/d	37.099.87
	To Bank A/c	19,002.37
		37.099.87			37.099.87

3^rd	To Balance b/d	37.099.87	3^rd	By Balance c/d	57,052.37
	To Bank A/c	19,002.37
		57,052.37			57,052.37

4^th	To Balance b/d	57,052.37	4^th	By Balance c/d	78,002.49
	To Bank A/c	20,950.12
		78,002.49			78,002.49

5^th	To Balance b/d	78,002.49	5^th	By Bank A/c	74,882.39
				By Sinking Fund Investment A/c	3,120.10
		78,002.49			78,002.49

Interest on Sinking Fund Investment Account

Date	Particulars	₹	Date	Particulars	₹
2^nd	To Sinking Fund A/c	904.87	2^nd	By Bank A/c	904.87
		904.87			904.87

3^rd	To Sinking Fund A/c	1,855	3^rd	By Bank A/c	1,855
		1,855			1,855

4^th	To Sinking Fund A/c	2,852.62	4^th	By Bank A/c	2,852.62
		2,852.62			2,852.62

5^th	To Sinking Fund A/c	3,900.12	5^th	By Bank A/c	3,900.12
		3,900.12			3,900.12

Debentures Holders Account

Date	Particulars	₹	Date	Particulars	₹

5^th	To Bank A/c	10,000	5^th	By Debentures	10,000
		10,000			10,000

Working Note :-

(1) Annual installment to be credited to Sinking fund account :

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Amount required = Rs. 1,00,000

Annuity table multiplier = 0.180975

So, 1,00,000 X 0.180975 = Rs. 18097.50 paise

(2) Sale proceeds of investment :

Book value of investment = Rs. 78002.49

96% i.e., 78,002.49 X 96% = Rs. 74,882.39

It all about Question 21 Chapter 10 of +2-Part-1, If you have any problem please comment below.

Redemption of Debentures – explained with an example

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Question 21 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Question 22 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Question 24 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Question 28 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Question 30 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Question 35 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

Question 36 Chapter 10 of +2-Part-1 – USHA Publication 12 Class Part – 1

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Chapter-Wise Solution of Usha Publication Accountancy – Part 2 Class 12 – Session 2024-25 as per the PSEB curriculum

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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

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

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The solution of Question 21 Chapter 10 of +2 Part-1:-

Check Out the Solution of all questions of this chapter:

Download a PDF of Chapter No. 10 – Company Accounts (Redemption of Debentures):

Chapter-Wise Solution of Usha Publication Accountancy – Part 2 Class 12 – Session 2024-25 as per the PSEB curriculum

Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 2 Class 12 by Unimax Publication

Check out Part 1 of both books.

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