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M Mehta
May 29, 2009, 09:06 PM
Suppose deep discount bond purchased for Rs.1000 and at maturity after 10 years we recived Rs 1500.
We have booked difference amount of Rs1500-Rs1000 = Rs500 as interest accrued but not due for 10 years.

Now after 5 years prematured at Rs 800.
So we have loss of Rs.250 in interest already booked for five years and loss of Rs,200/- in basic amount i.e 1000-800

Please give entries to be passed.

ROLCAM
May 30, 2009, 04:00 AM
You actually need to enter in your books
what actually happens.
1) The Purchase.
2) The Maturity.
You need not bother as to what might
happen in the future.
In this case, you book the purchase
and subsequently you book the maturity.
If the deal sustained a loss, you must bring this to account.

M Mehta
May 31, 2009, 08:04 PM
Please mail me journal entries because we have early maturity and loss happens in deep discount bonds

You actually need to enter in your books
what actually happens.
1) The Purchase.
2) The Maturity.
You need not bother as to what might
happen in the future.
In this case, you book the purchase
and subsequently you book the maturity.
If the deal sustained a loss, you must bring this to account.

ROLCAM
May 31, 2009, 09:44 PM
1)
DEBIT Bonds Account RS. 1000
CREDIT Bank Account RS.1000

Being purchase.

2)
DEBIT Bank Account RS. 800
CREDIT Bonds Account RS.800

Being maturity.

3)
DEBIT Loss on Investment Account RS. 200
CREDIT Bond Account RS.200

Being loss sustained at maturity on bonds.