(When debentures are purchased for immediate cancellation and Sinking Fund exists).
The following balances appeared in the books of Cheerful Ltd. as on 1st April, 2010:
|
9% Debentures (face value Rs.100) |
Rs.1,50,000 |
|
|
Debenture Redemption Fund |
Rs.75,000 |
|
|
Debenture Redemption Fund Investment |
Rs.75,000 |
(in 8% Government Bonds of the face value of `90,000)
Interest on the debentures was payable on 30th September and 31st March and interest on Government Bonds was receivable on the same dates.
On 31st May, 2010 the company purchased for immediate cancellation 250 debentures in the market at Rs.95 each cum interest. The amount required for this was raised by selling 8% Government Bonds of the face value of Rs.27,000.
On 31st March, 2011 Rs.20,800 was appropriated for the Sinking Fund and on the same date 8% Government Bonds were acquired for the amount plus the interest on investments. The face value of the Government Bonds acquired was Rs.28,000. You are required to show the journal entries and ledger accounts in the books of the company. Ignore Income tax.