Decorum Company and the trustee provided the following transactions in chronological order in connection with a sinking fund: 

a. Cash contribution to the sinking fund, P1,000,000. 

b. Acquisition of securities at par by the trustee, P700,000. 

c. The trustee receives interest on the securities, P60,000. The trustee pays expenses of P30,000. 

d. The trustee sells the securities for P800,000 plus accrued interest, P10,000. 

e. The trustee renders a report to the entity. 

f. The trustee pays bonds payable of P1,000,000 and interest of P100,000. 

g. The trustee remits the remaining cash to the entity. 

Prepare journal entries on the books of Decorum Company to record the transactions.

Answer rating: 100% (QA)

Journal Entries a Sinking fund Assets Ac Dr 1000000 To cash Account Cr 1000000 being cas... View the full answer