you are required to show debenture redemption fund debenture redemption fund investm 618230

X Ltd. issued 10,000 12% debentures of Rs.100 each at par on 1 April 2008. These debentures are redeemed at the end of the fifth year at 5% premium. It was resolved that sinking fund should be formed and invested in 10% development bonds of Rs.100 each. Interest of bonds is payable on 31 March every year.

Reference to Sinking Fund Table shows that Rs.0.1638 invests at the end of every year at 10% compound interest will produce Rs.1 at the end of the fifth year. 10% Development bonds of the required amount were purchased on different dates at the following prices:

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On 31 March 2009

Rs.94

On 31 March 2010

Rs.96

On 31 March 2011

Rs.98

You are required to show debenture redemption fund, debenture redemption fund investment A/c and interest on debenture redemption fund investments A/c for the first three years in the books of X Ltd. Accounting year of the company ends on 31 March.

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