Question

Accounting entry for recording loss on the realization of sinking fund investment is:

• A.

  Sinking fund account Sinking fund investment account

  Dr.

  Cr.

• B.

  Sinking fund investment account Sinking fund account

  Dr.

  Cr.

• C.

  Profit an loss account Sinking fund investment account

  Dr.

  Cr.

• D.

  Sinking fund investment account Profit and Loss account

  Dr.

  Cr.

Answer 1

The correct option is A

Sinking fund account Sinking fund investment account

Dr.

Cr.

If Sinking fund investments are sold—at loss:

Sinking fund a/c Dr. (with amount of loss)

To Sinking fund investment a/c (with book value of investments sold)

(Being sinking fund investments sold at loss)