Page 133 - Accountancy_F5

Note:
When an investor acquires bond at ex-interest, he/she is required to pay accrued interest
to the date of purchase in addition to the price paid. That is why calculations in note 2
and note 6 that follow involve finding out the amount of interest to be paid to the seller
to the date of sale.
FOR ONLINE READING ONLY
Workings:

1. Opening balance. Accrued interest

TZS 60 ,000 000 # 6 % # 3 = TZS 900 ,000
,
13
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2. Purchases at 1 March
st
10 ,000 000 # 98 = TZS , 9 800 000
,
,
100
3. Interest semi-annual 31 March
st
60 ,000 000 # 6 # 1 = TZS , 1 800 000
,
,
100 2
4. Sales on 1 July at ex-interest
st
20 ,000 000 # 100 = TZS 20 ,000 000
,
,
100
Add: Accrued Interest
3
6
20 ,000 000 # 100 # 12 = TZS 20 300 ,000
,
,300 000
,
5. Determination of profit or loss on sale investment
Proceeds TZS20,300,000
,
20 ,000 000
,
,
Less: Cost = TZS 70 ,000 000 # 68 ,850 000 = TZS 19 ,671 429
,
Profit on sale investment TZS682,571
6. Interest semi-annual 30 Sept.
th
70 ,000 000 # 6 # 1 = TZS , 2 100 000
,
,
100 2
7. Purchases on 1/10/2021 at cum-interest

, 5 000 000 # 98 = TZS , 4 900 000
,
,
100
Less: Interest Accrued
6
0
0
, 5 000 000 # 100 # 12 = TZS , 4 900 000
,
,
Student’s Book Form Five
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