Advertisement
Question 21 Chapter 10 of +2-Part-1
Advertisement
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:-
9% Debentures Account
Date | Particulars | ₹ | Date | Particulars | ₹ |
1st | To Balance c/d | 1,00,000 | 1st | By Debenture App. & All. A/c | 1,00,000 |
1,00,000 | 1,00,000 | ||||
2nd | To Balance c/d | 1,00,000 | 2nd | By Balance b/d | 1,00,000 |
1,00,000 | 1,00,000 | ||||
3rd | To Bank A/c | 1,00,000 | 3rd | By Balance b/d | 1,00,000 |
1,00,000 | 1,00,000 | ||||
4th | To Balance c/d | 1,00,000 | 4th | By Balance b/d | 1,00,000 |
1,00,000 | 1,00,000 | ||||
5th | To Debentures holders A/c | 1,00,000 | 5th | By Balance b/d | 1,00,000 |
1,00,000 | 1,00,000 |
Debentures Sinking Fund Account
Date | Particulars | ₹ | Date | Particulars | ₹ |
1st | To Balance c/d | 18,097.50 | By Statement Profit & loss | 18,097.50 | |
18,097.50 | 18,097.50 | ||||
2nd | To Balance c/d | 37,099.87 | 2nd | 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 | ||||
3rd | To Balance c/d | 57,052.37 | 3rd | 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 | ||||
4th | To Balance c/d | 78,002.76 | 4th | 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 | ||||
5th | To Sinking Fund Investment A/c | 3,120.10 | 5th | 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 | ₹ |
1st | To Bank A/c | 18,097.50 | 1st | By Balance c/d | 18,097.50 |
18,097.50 | 18,097.50 | ||||
2nd | To Balance b/d | 18,097.50 | 2nd | By Balance c/d | 37.099.87 |
To Bank A/c | 19,002.37 | ||||
37.099.87 | 37.099.87 | ||||
3rd | To Balance b/d | 37.099.87 | 3rd | By Balance c/d | 57,052.37 |
To Bank A/c | 19,002.37 | ||||
57,052.37 | 57,052.37 | ||||
4th | To Balance b/d | 57,052.37 | 4th | By Balance c/d | 78,002.49 |
To Bank A/c | 20,950.12 | ||||
78,002.49 | 78,002.49 | ||||
5th | To Balance b/d | 78,002.49 | 5th | By Bank A/c | 74,882.39 |
By Sinking Fund Investment A/c | 3,120.10 | ||||
78,002.49 | 78,002.49 |
Advertisement-X
Interest on Sinking Fund Investment Account
Date | Particulars | ₹ | Date | Particulars | ₹ |
2nd | To Sinking Fund A/c | 904.87 | 2nd | By Bank A/c | 904.87 |
904.87 | 904.87 | ||||
3rd | To Sinking Fund A/c | 1,855 | 3rd | By Bank A/c | 1,855 |
1,855 | 1,855 | ||||
4th | To Sinking Fund A/c | 2,852.62 | 4th | By Bank A/c | 2,852.62 |
2,852.62 | 2,852.62 | ||||
5th | To Sinking Fund A/c | 3,900.12 | 5th | By Bank A/c | 3,900.12 |
3,900.12 | 3,900.12 |
Debentures Holders Account
Date | Particulars | ₹ | Date | Particulars | ₹ |
5th | To Bank A/c | 10,000 | 5th | By Debentures | 10,000 |
10,000 | 10,000 |
Working Note :-
(1) Annual installment to be credited to Sinking fund account :
Amount required = Rs. 1,00,000
Annuity table multiplier = 0.180975
Advertisement-X
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
Advertisement-X
You can also Check out the solved question of other Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Advertisement-Y
Leave a Reply