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On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.?
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On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each red...
Journal Entries for Redemption of Debentures and Establishment of Sinking Fund

1. Establishment of Sinking Fund:

Bank Account Dr. 2320

To Sinking Fund Investment Account 2320

(Being the establishment of Sinking Fund)

2. Payment of Interest on Debentures:

Debenture Interest Account Dr. 900

To Bank Account 900

(Being the payment of interest on Debentures)

3. Transfer of Sinking Fund Investment Account to Bank Account:

Sinking Fund Investment Account Dr. 2320

To Bank Account 2320

(Being the transfer of Sinking Fund Investment Account to Bank Account)

4. Redemption of Debentures:

Debenture Redemption Account Dr. 20000

To Debenture Holder's Account 20000

(Being the redemption of Debentures)

Ledger Accounts

1. Bank Account:

Particulars | Debit | Credit

Opening Balance | - | -

Establishment of Sinking Fund | - | 2320

Payment of Interest on Debentures | 900 | -

Transfer of Sinking Fund Investment Account | - | 2320

Closing Balance | - | -

2. Sinking Fund Investment Account:

Particulars | Debit | Credit

Opening Balance | - | -

Establishment of Sinking Fund | 2320 | -

Transfer to Bank Account | - | 2320

Closing Balance | - | -

3. Debenture Redemption Account:

Particulars | Debit | Credit

Opening Balance | - | -

Redemption of Debentures | 20000 | -

Closing Balance | - | -

4. Debenture Holder's Account:

Particulars | Debit | Credit

Opening Balance | 20000 | -

Redemption of Debentures | - | 20000

Closing Balance | - | -

Explanation

X Ltd. issued ₹20,000 9% Debentures of ₹100 each redeemable after 4 years. For this purpose, a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years.

The establishment of the Sinking Fund is represented in the journal entry by debiting Bank Account and crediting Sinking Fund Investment Account. The payment of interest on Debentures is represented in the journal entry by debiting Debenture Interest Account and crediting Bank Account. The transfer of Sinking Fund Investment Account to Bank Account is represented in the journal entry by debiting Sinking Fund Investment Account and crediting Bank Account. The redemption of Debentures is represented in the journal entry by debiting Debenture Redemption Account and crediting Debenture Holder's Account.

The ledger accounts show the transactions related to Bank Account, Sinking Fund Investment Account, Debenture Redemption Account, and Debenture Holder's Account. The Bank Account shows the opening and closing balances, the establishment of the Sinking Fund, the payment of interest on Debentures, and the transfer of Sinking Fund Investment Account. The Sinking Fund Investment Account shows the opening and closing balances, and the establishment of the Sinking Fund and the transfer to Bank Account. The Debenture Redemption Account shows the opening and closing balances and the redemption of Debentures.
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On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each red...
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On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.?
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On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.?.
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Here you can find the meaning of On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? defined & explained in the simplest way possible. Besides giving the explanation of On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.?, a detailed solution for On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? has been provided alongside types of On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? theory, EduRev gives you an ample number of questions to practice On 1st April 2014, X Ltd. issued ₹20,0009% Debentures of ₹100 each redeemable after 4 years. For this purpose a Sinking Fund was established. The investments were expected to earn 5% net per annum. Sinking Fund Table shows that ₹0.232012 invested annually at 5% amounts to ₹1 in 4 years. Give journal entries and necessary ledger accounts to deal with the redemption, assuming that investments were realised at par on 31st March 2018. Entries relating to interest on debentures may be ignored.? tests, examples and also practice CA Foundation tests.
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