In 1988, PWICO Ltd. Issued shs. 1 billion 6% debentures of shs. 5,000 each par value,...

 

Transcribed Image Text:

In 1988, PWICO Ltd. Issued shs. 1 billion 6% debentures of shs. 5,000 each par value, which were redeemable at shs. 5,100 on 30th June 1999. Annual appropriations had been made out of profits to a debenture redemption reserve set up under the terms of issue. The appropriations were invested annually on 30th June, together with the interest on investment for the year ended on that date. The trustees have power to purchase, for immediate cancellation, any debenture available at a market price below par, and to realise investments of the debenture redemption for this purpose. The following balances appeared in the company's books on 1st July 1998: A. Debenture Redemption Reserve account shs 587,450,000, represented by investments at cost of an equal amount. B. 6% debenture account shs. 600 million. The following transactions took place during the year ended 30th June 1999: (a) Half-year's debenture interest to 31st December 1998, was paid on that date. (b) Investments costing shs. 48,750,000 were sold, and realised 50,250,000 on 1st January 1999, in order to provide funds for purchase of debentures. On the same date, shs. 50 million debentures were purchased at shs 4,900 (inclusive of expenses) on the market, and cancelled. (c) The remaining investments of the reserve fund were sold, and the proceeds amounting to shs. 551 million were received on 29th June 1999. (d) Interest income amounting to 34,750,000 received in the year from the debenture redemption investments was not invested in view of the impending debenture redemption. (e) On 30th June 1999, the debentures were repaid together with the half-year's interest thereon. Required to write up the following ledger accounts for the year ended 30th June 1999. (i) 6% debentures Debenture Redemption Reserve Debenture Redemption Investment 全局 In 1988, PWICO Ltd. Issued shs. 1 billion 6% debentures of shs. 5,000 each par value, which were redeemable at shs. 5,100 on 30th June 1999. Annual appropriations had been made out of profits to a debenture redemption reserve set up under the terms of issue. The appropriations were invested annually on 30th June, together with the interest on investment for the year ended on that date. The trustees have power to purchase, for immediate cancellation, any debenture available at a market price below par, and to realise investments of the debenture redemption for this purpose. The following balances appeared in the company's books on 1st July 1998: A. Debenture Redemption Reserve account shs 587,450,000, represented by investments at cost of an equal amount. B. 6% debenture account shs. 600 million. The following transactions took place during the year ended 30th June 1999: (a) Half-year's debenture interest to 31st December 1998, was paid on that date. (b) Investments costing shs. 48,750,000 were sold, and realised 50,250,000 on 1st January 1999, in order to provide funds for purchase of debentures. On the same date, shs. 50 million debentures were purchased at shs 4,900 (inclusive of expenses) on the market, and cancelled. (c) The remaining investments of the reserve fund were sold, and the proceeds amounting to shs. 551 million were received on 29th June 1999. (d) Interest income amounting to 34,750,000 received in the year from the debenture redemption investments was not invested in view of the impending debenture redemption. (e) On 30th June 1999, the debentures were repaid together with the half-year's interest thereon. Required to write up the following ledger accounts for the year ended 30th June 1999. (i) 6% debentures Debenture Redemption Reserve Debenture Redemption Investment 全局

Answer rating: 100% (QA)

i Dr To Debenture account 600000000 To Interest account 34750000 To Profit and Loss account 15375000... View the full answer