Page 134 - Accountancy_F5

8. Sales on 1 Nov. at ex-interest
st
20 ,000 000 # 99 = TZS 19 ,800 000
,
,
100
Add: Accrued interest
20 ,000 000 # 6 # 5 = TZS 500 ,000
,
,
100 12 20 ,300 000
FOR ONLINE READING ONLY
9. Determination of profit or loss
Proceeds 20,300,000
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20 ,000 000
,
Less: Cost. # 54 ,132 571 = 19 ,684 571
,
,
55 ,000 000
,
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Loss on sale investment 615,429
10. Accrued interest 31 Dec.
st
35 ,000 000 # 6 # 3 = 525 ,000
,
100 12
Exercise 4.3
Sasa Kazi Ltd bought 50, 12 per cent treasury bonds with a par-value of TZS 1,000,000
each on 1 January 2021 at TZS 960,000. On 1 August, 2021, the company decided
st
st
to sell 10 T-bonds of 12 per cent, each at TZS 970,000. Interest is paid semi-annually;
on 30 June and 31 December of every year. The market price of the bond at the
st
th
time of sale was TZS 980,000.
Required: (a) Make necessary computations and then record the transactions in
the bonds account of Sasa Kazi Ltd.
(b) Make necessary computations and then record the transactions
in the bonds account of Sasa Kazi Ltd if the selling price was
quoted at ex-interest.

The treatment of year-end entries
At the end of the financial year, when a company closes its books of accounts to establish
the outcome of its operations, the company needs to establish whether it has made a profit
or loss from investment activities as well as to establish the value of its investment for
reporting in the statement of financial position. For investment activities, a company can
determine profit or loss every time an individual transaction takes place, or it can wait till
the end of an accounting period where all transactions are considered together through
balancing the investment account. In balancing the investment account, the difference
in a nominal column is just showing the face value of the assets held. Meanwhile, the
balance between the principal columns reveals the cost of financial assets to be reported
in the statement of financial position and the balance between the interest columns is
the income derived from the investment.

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