Question - 16

On 1st April 2011, a company issued 15% debentures Rs. 10,00,000 at par the debentures were redeemable at par after three years from the date of issue a sinking fund was set up to raise funds for redemption of debentures the amount for the purpose was invested in 6% government securities of Rs. 100 each available at par the sinking fund table shows that if investment earns 6% per annum to get Rs. 1 at the end of 3 years one has to invest Rs. 0.31411 every year together wiht interest that will be earned on 31st March 2014, all the government securities were sold at a total loss of Rs. 6,000 and the debentures were redeemed at par. 

Prepare debenture account, sinking fund account, sinking fund investment account and interest on sinking fund investment. Company closes its books of accounts every years on 31st March.

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