The following balances appeared in the books of a Company as on 1st April, 2022: Sinking Fund for Redemption of Debentures ₹ 5,50,000; Sinking Fund Investments ₹ 3,44,325; 7% Debentures ₹ 10,00,000. In order to redeem th

CS Executive · Corporate Accounting and Financial Management · PYQS · December 2023
The following balances appeared in the books of a Company as on 1st April, 2022: Sinking Fund for Redemption of Debentures ₹ 5,50,000; Sinking Fund Investments ₹ 3,44,325; 7% Debentures ₹ 10,00,000. In order to redeem these debentures, the company sold the Sinking Fund Investments and realized ₹ 3,45,000. You are required to pass journal entry for the accounting treatment of profit/loss on sale of Sinking Fund Investment.

Answer & Explanation:

Journal Entry for Sale of Sinking Fund Investments Particulars Dr. (₹) Cr. (₹) Bank A/c 3,45,000 To Debenture Sinking Fund Investments A/c 3,44,325 To Debenture Sinking Fund A/c / P&L 675 (Being profit on sale of investments transferred to Sinking Fund Account) Working Note: Sale Price of Investments = ₹ 3,45,000 Less: Book Value of Investments Sold = ₹ 3,44,325 Profit on Sale of Investments = ₹ 675

Topics: Corporate Accounting

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