Government Securities.

On 1 January, 2012 a company purchased a machine at a cost of ~ 80,000. In order to provide sufficient fund for replacement of the machine at the end of its working life it decided to create a Sinking fund and to invest the amount in Government Securities bearing interest @ 5% per annum. The working life of the machine was 4 years and estimated scrap value was ~ 16,000.

The machine became obsolete and was sold at ~ 30,000 on 31 December, 2014. The Government Securities were sold at a profit of ~ 3,000. A new machine was purchased on 1 January, 2012 at ~ 1,20,000. Sinking Fund Table shows that ~ 0.2320 invested each year will produce ~ 1 at tne end of 4 years at 5% annual interest.

Prepare Machinery Account, Sinking Fund Account and Sinking Fund Investment Account

"Order a similar paper and get 100% plagiarism free, professional written paper now!"

Order Now