Page 131 - Accountancy_F5

31 Dec.
st
1 Dec. 2020
st
Gov. Bond Interest
acquisition
20,000 800 19,000 (bank) 2,100
31 Dec. 31 Dec.
st
st
FOR ONLINE READING ONLY
Investment 2020
income Bal c/d 35,000 32,500
-Profit/Loss - 2,200 -
35,000 3,000 32,500 10,000 3,000 32,500

Workings:
LANGUAGE EDITING
1. Purchasing price (1 Nov. 2020) = 95% x20,000,000 = TZS 19,000,000
st
2. Accrued interest on purchased bond (1 July -31 Oct. 2020) – paid in addition to
st
st
4
purchase price = 12 #12% #20,000,000 = TZS 800,0000
6
3. Interest on TZS 15,000,00 bond (30 June & 31 Dec, 2020) = 12 #12% #
th
st
15,000,000 = TZS 900,000
4. The amount of interest received in 31 December (TZS 2,000,000) includes semi-
st
annual instalment of TZS 900,000 on bonds acquired in 2018 plus TZS 1,200,000
semi-annual instalment of bonds acquired 1 November 2020 though only two
st
months’ interest is recognised as investment income in 2020.

Example 4.10
Majengo Co Ltd. provides the following details relating to its holding in 6 per cent
government bonds:
1.1.2021 Opening balance at face value of TZS 60,000,000 and cost TZS
59,000,000.
1.3.2021 Bought TZS 10,000,000, 6% government bonds at 98 ex-interest.
1.7.2021 Sold a 6% government bond of TZS 20,000,000 at 100 ex-interest out
of the original holding.
1.10.2021 Purchased TZS 5,000,000, 6% government bonds at 98 cum-interest.
1.11.2021 Sold a 6% government bond of TZS 20,000,000 at 99 ex-interest out
of the original holding.
Interest dates are 30 September and 31 March. Majengo Co. Ltd closes its books
st
th
every 31 December.
st
Required: Prepare an investment account as it would appear in the books of Majengo
Co. Ltd for the year ended 31 December 2021.
st

Student’s Book Form Five
118

23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 118 23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 118