Question No 09 Chapter No 14 - USHA Publication 11 Class

Question No 09 Chapter No 14

Table of Contents

The solution of Question No 09 Chapter No 14: –

Usha Publication – Elements of Book-Keeping PSEB (Class 11) – Solution

Sinking fund for Repayment of Loan

9. On 1srt April 2015 a company abstained a loan of Rs 60,000 from a finance company, which was repayable after three years. A sinking fund was created for the repayment of the loan and every year the amount provided was invested in an investment earning 5% p.a. Sinking Fund table shows that Re. 0.317200 invested each year at 5% will amount to Re. 1 after three years at compound interest. The investment was sold for Rs 39,000 at the and of third year and loan being repaid.
Given necessary accounts in the books of the company

The solution of Question No 09 Chapter No 14: –

Dr.	Sinking Fund Account						Cr.
Dat	Particulars	J. F.	Amount	Date	Particulars	J.F.	Amount
				31/03/15	By Profit/Loss A/c		19,032
31/03/15	By Balance C/d		19,032
			19,032				19,032
				01/04/15	By Balance b/d		19,032
				31/03/16	By Interest A/c (19,032 x 5%)		952
				31/03/16	By Profit/Loss A/c		19,032
31/03/16	By Balance C/d		39,016
			39,016				39,016
31/03/16	To Sinking Fund Investment A/c (Loss on Sale)		16	01/04/16	By Balance b/d		39,016
				31/03/17	By Interest A/c (39,016 x 5%)		1,951
31/03/17	By General Reserve		59,983	31/03/17	By Profit/Loss A/c		19,032
			59,999				59,999

Dr.	Sinking Fund Investment Account						Cr.
Dat	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31/03/15	To Bank A/c		19,032
				31/03/16	By Balance c/d		19,032
			19,032				19,032
01/04/16	To Balance b/d		19,032
31/03/17	To Bank A/c		19,032
				31/03/17	By Balance c/d		39,016
			39,016				39,016
31/03/17	To Bad debts A/c		39,016	31/03/18	By Bank A/c		39,000
				31/03/18	By Sinking fund A/c		16
			39,016				39,016