On April 01, 2014 a company issued 15% debentures of Rs 10,00,000 at par. The debentures were redeemable at par after three years from the date of Issue. A sinking fund was set up to raise funds for redemption of debentures. The amount for the purpose was invested in 6% Government securities of Rs 100 each available at par. The sinking fund table shows that if investments earn 6% per annum, to get Re.1 at the end of 3 years, one has to invest Rs 0.31411 every year together with interest that will be earned. On March 31, 2017, all the Government securities were sold at a total loss of Rs 6,000 and the debentures were redeemed at par.

Prepare Debentures Account Sinking Fund Account, Sinking Fund Investment Account and Interest on Sinking Fund Investment Company closes its books of accounts every year on March 31.

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Solution

Ledger

15% Debentures Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2015

2014

Mar. 31

Balance c/d

10,00,000

Apr. 1

Bank

10,00,000

10,00,000

10,00,000

2016

2015

Mar. 31

Balance c/d

10,00,000

Apr. 1

Balance b/d

10,00,000

10,00,000

10,00,000

2017

2016

Mar. 31

Debentureholders

10,00,000

Apr. 1

Balance b/d

10,00,000

10,00,000

10,00,000

Sinking Fund Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2015

2015

Mar. 31

Balance c/d

3,14,110

Mar. 31

Profit and Loss Appropriation

3,14,110

3,14,110

3,14,110

2016

2015

Mar. 31

Balance c/d

6,47,066

Apr. 1

Balance b/d

3,14,110

2016

Mar. 31

Profit and Loss Appropriation

3,14,110

Mar. 31

Interest on Sinking Fund Investment

18,846

6,47,066

6,47,066

2017

2016

Mar. 31

Sinking Fund Investment

6,000

Apr. 1

Balance b/d

6,47,066

General Reserve

9,94,000

2017

Mar. 31

Profit and Loss Appropriation

3,14,110

Mar. 31

Interest on Sinking Fund Investment

38,824

10,00,000

10,00,000

Sinking Fund Investment Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2015

2015

Mar. 31

Bank

3,14,110

Mar. 31

Balance c/d

3,14,110

3,14,110

3,14,110

2015

2016

Apr. 1

Balance b/d

3,14,110

Mar. 31

Balance c/d

6,47,066

2016

Mar. 31

Bank

3,32,956

6,47,066

6,47,066

2016

2017

Apr. 1

Balance b/d

6,47,066

Mar. 31

Bank

6,41,066

Sinking Fund

6,000

6,47,066

6,47,066

Interest on Sinking Fund Investment Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

2016

Mar. 31

Sinking Fund

18,846

Mar. 31

Bank

18,846

18,846

18,846

2017

2017

Mar. 31

Sinking Fund

38,824

Mar. 31

Bank

38,824

38,824

38,824

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Similar questions

On January 01, 2012, X. Ltd. issues 5,000, 8% Debentures of Rs 100 each repayable at par at the end of three years. It has been decided to set up a cumulative sinking fund for the purpose of their redemption. The investments are expected to realise 4% net. The Sinking Fund Table shows that Rs 0.320348 amounts to one rupee @4% per annum in three years. On December 31, 2015 the balance at bank was Rs 2,42,360 and the investments realised Rs 3,25,000. The debentures were paid off.

Give journal entries and show ledger account.

On January 1, 2011, X Ltd issue 5,000, 8% Debentures of Rs. 100 each repayable at par at the end of three years. It has been decided to set up a cumulative sinking fund for the purpose of their redemption. The investments are expected to realise 4% net. The Sinking Fund Table shows that Rs. 0.320348 amounts to one rupee @ 4% per annum in three years. On December 31, 2013 the balance at bank was Rs. 2,42,360 and the investments realised Rs. 3,25,000. The debentures were paid off. Give journal entries and show ledger account.

On April 01, 2016 the following balances appeared in the books of Z. Ltd.:

	Rs
6% Debentures	1,00,000
Debentures Redemption Reserve Fund	80,000
D.R. Reserve Fund Investments	80,000

The investments consisted of 4% Government securities of the face value of Rs 90,000.

The annual instalment was Rs 16,400. On March 31, 2017, the balance at Bank was Rs 26,000 (after receipt of interest on D.R.Reserve Fund Investment). Investments were realised at 92% and the Debentures were redeemed. The interest for the year had already been paid.

Show the ledger accounts affecting redemption.

The following balances appeared in the books of Z.Ltd. on April 01, 2016

	Rs
12% Debentures	1,50,000
Debentures Redemption Fund	1,25,000
Debentures Redemption Fund Investment	1,25,000
(Represented by Rs 1,47,500, 3% Govt. Securities)	1,25,000

The annual instalment added to the fund is Rs 20,575. On March 31, 2017, the bank balance after the receipt of interest on the investment was Rs 39,100. On that date, all the investments were sold at 83 per cent and the debentures were duly redeemed.

Show the necessary ledger accounts for the year 2016-17.

On January 1,2011, the following balances appeared in the books of Z Ltd

$\begin{matrix} Items & Rs. 6 % Debentures & 1, 00, 000 Debentures Redemption Reserve Fund & 80, 000 Debentures Redemption Reserve Fund Investments & 80, 000 \end{matrix}$

The investments consisted of 4 % Government securities of the face value of Rs. 90,000.
The annual instalment was Rs. 16,400. On December 31, 2011, the balance at Bank was Rs. 26,000 (after receipt on interest on Debenture Redemption Reserve Fund Investment). Investments were realised at 92 % and the Debentures were redeemed. The interest for the year had already been paid.
Show the ledger accounts affecting redemption.

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Ledger 15% Debentures Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2014
Mar. 31	Balance c/d		10,00,000	Apr. 1	Bank		10,00,000
			10,00,000				10,00,000

2016				2015
Mar. 31	Balance c/d		10,00,000	Apr. 1	Balance b/d		10,00,000
			10,00,000				10,00,000

2017				2016
Mar. 31	Debentureholders		10,00,000	Apr. 1	Balance b/d		10,00,000
			10,00,000				10,00,000

Sinking Fund Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Mar. 31	Balance c/d		3,14,110	Mar. 31	Profit and Loss Appropriation		3,14,110
			3,14,110				3,14,110
2016				2015
Mar. 31	Balance c/d		6,47,066	Apr. 1	Balance b/d		3,14,110
				2016
				Mar. 31	Profit and Loss Appropriation		3,14,110
				Mar. 31	Interest on Sinking Fund Investment		18,846
			6,47,066				6,47,066
2017				2016
Mar. 31	Sinking Fund Investment		6,000	Apr. 1	Balance b/d		6,47,066
	General Reserve		9,94,000	2017
				Mar. 31	Profit and Loss Appropriation		3,14,110
				Mar. 31	Interest on Sinking Fund Investment		38,824
			10,00,000				10,00,000

Sinking Fund Investment Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Mar. 31	Bank		3,14,110	Mar. 31	Balance c/d		3,14,110
			3,14,110				3,14,110
2015				2016
Apr. 1	Balance b/d		3,14,110	Mar. 31	Balance c/d		6,47,066
2016 Mar. 31	Bank		3,32,956
			6,47,066				6,47,066

2016				2017
Apr. 1	Balance b/d		6,47,066	Mar. 31	Bank		6,41,066
					Sinking Fund		6,000
			6,47,066				6,47,066

Interest on Sinking Fund Investment Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2016				2016
Mar. 31	Sinking Fund		18,846	Mar. 31	Bank		18,846
			18,846				18,846

2017				2017
Mar. 31	Sinking Fund		38,824	Mar. 31	Bank		38,824
			38,824				38,824