The following balances appeared in the books of R Ltd. on April 1, 2017: 12% Debentures ₹8,00,000. Sinking fund ₹7,00,000. Sinking fund investment ₹7,00,000 represented by 10% ₹7,50,000 secured bonds of Government of Ind

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2018
The following balances appeared in the books of R Ltd. on April 1, 2017: 12% Debentures ₹8,00,000. Sinking fund ₹7,00,000. Sinking fund investment ₹7,00,000 represented by 10% ₹7,50,000 secured bonds of Government of India. Annual contribution to the sinking fund was ₹1,20,000 made on 31st March each year. On 31st March, 2018, balance at bank was ₹3,50,000 before receipt of interest. The company sold investments at 90% for redemption of debentures at a premium of 10% on the above date. You are required to prepare the following accounts for the year ended 31st March, 2018: Sinking Fund Account Sinking Fund Investment Account Bank Account.

Answer & Explanation:

Sinking Fund Account Date Particulars Amount (₹) Date Particulars Amount (₹) 31.03.18 To Sinking Fund Investment A/c (loss on sale of govt. bonds) 25,000 01.04.17 By Balance b/d 7,00,000 31.03.18 To General Reserve A/c b/d 8,70,000 31.03.18 By Profit and Loss A/c 1,20,000 31.03.18 By Interest on Sinking fund A/c (Interest on 10% govt. bond) 75,000 Total 8,95,000 Total 8,95,000 Sinking Fund Investment Account Date Particulars Amount (₹) Date Particulars Amount (₹) 01.04.17 To Bal. b/d 7,00,000 31.03.18 By Bank A/c 6,75,000 31.03.18 By Sinking Fund A/c (loss on sale of govt. bonds) 25,000 Total 7,00,000 Total 7,00,000 Bank Account Date Particulars Amount (₹) Date Particulars Amount (₹) 31.03.18 To Bal. b/d 3,50,000 31.03.18 By 12% Debenture A/c 8,80,000 31.03.18 To Sinking Fund A/c 75,000 31.03.18 By Bal c/d 2,20,000 31.03.18 To Sinking Fund Investment A/c 6,75,000 Total 11,00,000 Total 11,00,000

Topics: Company Accounts

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