thisismyus
Oct 31, 2008, 10:52 AM
3. A company had made an issue of 5,000 debentures of Rs. 100 each at par a Sinking Fund having been created to provide for repayment.
Under the terms of issue, the company might under certain conditions purchase the debentures in the open market for cancellation.
On 1-4-2000, 3,800 of the debentures were outstanding and Sinking Fund then amounted to Rs. 2,50,000. The Sinking fund Investments that date consisted of Rs. 1,24,000 5% Loan (2500) standing in the books at Rs.1,20,000.
On 1-4-2000, the directors purchased Rs.20,000 of the debentures in Rs.19,000 realizing 5% Loan (2500) at 96 per cent to raise the necessary funds.
Interest on 5% Loan (2005) was received on 30th September and 31st March and was invested forthwith in further purchase of 5% Loan (2005) at per in each case.
On 31st March,2001 a further Rs.20,000 was credited to the Sinking Fund and invested in 5% Loan (2005), Rs 19,850 of which was purchased.
Pass journal entries to record these transactions in the books of the company and prepare necessary ledger accounts.
Under the terms of issue, the company might under certain conditions purchase the debentures in the open market for cancellation.
On 1-4-2000, 3,800 of the debentures were outstanding and Sinking Fund then amounted to Rs. 2,50,000. The Sinking fund Investments that date consisted of Rs. 1,24,000 5% Loan (2500) standing in the books at Rs.1,20,000.
On 1-4-2000, the directors purchased Rs.20,000 of the debentures in Rs.19,000 realizing 5% Loan (2500) at 96 per cent to raise the necessary funds.
Interest on 5% Loan (2005) was received on 30th September and 31st March and was invested forthwith in further purchase of 5% Loan (2005) at per in each case.
On 31st March,2001 a further Rs.20,000 was credited to the Sinking Fund and invested in 5% Loan (2005), Rs 19,850 of which was purchased.
Pass journal entries to record these transactions in the books of the company and prepare necessary ledger accounts.