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FA7

Unit – 3Investment Accounting Q1) Elaborate Investment Accounting.A1) The representing speculations happens when assets are paid for a venture instrument. The specific kind of bookkeeping relies upon the goal of the speculator and the relative size of the venture. Contingent upon these components, the accompanying kinds of bookkeeping may apply:  Held to development speculation. In the event that the financial specialist means to hold a venture to its development date (which adequately restricts this bookkeeping strategy to obligation instruments) and can do as such, the speculation is named held to development. This venture is at first recorded at cost, with amortization changes from that point to mirror any premium or rebate at which it was bought. The venture may likewise be recorded to mirror any perpetual hindrances. There is no continuous acclimation to advertise an incentive for this kind of venture. This methodology can't be applied to value instruments, since they have no development date.  Exchanging security. In the event that the financial specialist expects to undercut its interest in the term for a benefit, the speculation is named an exchanging security. This speculation is at first recorded at cost. Toward the finish of each ensuing bookkeeping period, change the recorded venture to its reasonable incentive as of the finish of the time frame. Any hidden holding gains and misfortunes are to be recorded in working pay. This speculation can be either an obligation or value instrument.  Ready to move. This is a speculation that can't be sorted as a held to development or exchanging security. This speculation is at first recorded at cost. Toward the finish of each ensuing bookkeeping period, change the recorded speculation to its reasonable incentive as of the finish of the time frame. Any hidden holding gains and misfortunes are to be recorded in other thorough pay until they have been sold.  Value strategy. On the off chance that the speculator has huge working or monetary power over the investee (by and large viewed as at any rate a 20% premium), the value strategy ought to be utilized. This venture is at first recorded at cost. In ensuing periods, the financial specialist perceives a lot of the benefits and misfortunes of the investee, after intra-element benefits and misfortunes have been deducted. Likewise, if the investee issues profits to the financial specialist, the profits are deducted from the speculator's interest in the investee.  Q2) Explain Materialness of AS 13 Accounting for Investments with its types.A2) AS 13 Accounting for Investments doesn't manage the accompanying:
  • The base for perceiving profits, premium, and rentals which are acquired on the speculations that are covered by AS 9
  • Money or working leases which are covered by AS 19
  • Interests in retirement advantage plans and extra security undertakings which is covered by AS 15
  • The accompanying which is framed under the Central or the State Government Act or proclaimed under Companies Act, 2013
  • Mutual Funds
  • Investment Funds and related Asset Management Companies
  • Banks just as open monetary establishments
  •  Types of Investments A. Current Investments - Current Investments will be ventures which by their temperament are promptly feasible and are proposed to be held for not exactly a year from the date when such speculation is finished.  B. Long haul Investments - Long-term speculations are ventures other than the current speculations, despite the fact that they may be uninhibitedly attractive.  Cost of Investments
  • Intermediary, obligations, and expenses - The expense of speculations incorporate charges identified with procurement of business, obligations, and charges
  • Non-money thought – on the off chance that speculations are gained, or halfway procured, by
  • Issuing shares
  • Issuing other securities
  • some other asset,
  • the expense of obtaining is the reasonable estimation of protections which are given or the resources which are surrendered. The reasonable worth may not basically be same as the standard or ostensible estimation of protections which are given. It very well may be judicious to consider reasonable estimation of such speculation obtained on the off chance that it's more clear
  • Premium, profit or other receivables – Dividends, premium and other receivables that are regarding the ventures are generally considered as pay, is the ROI (return on the speculation).
  •  Nonetheless, in specific conditions, such inflows mean a recuperation of the expense and doesn't shape part of the pay.  On the off chance that it's hard to do such assignments, cost of speculation is normally decreased to the degree of profits receivable just on the off chance that they address unmistakably the recuperation of a bit of the expense
  • Right Shares – on the off chance that correct offers offered are accordingly bought in for, cost of such right offers is then added to conveying the measure of unique holding.
  •  In the event that the rights aren't bought in for, notwithstanding, are sold, deal continues from the offer of such rights are moved to P/L articulation. Yet, where a venture is obtained on a cum-right premise and market estimation of the speculation following turning out to be ex-right is not exactly the expense for which such speculation was gained, it very well may be judicious to apply the returns from the offer of rights to lessen conveying the measure of the venture to the market esteem  Conveying Amount of Investments Current ventures should be conveyed in fiscal reports at lower of cost and reasonable worth which is resolved either by class of speculation or on an individual speculation premise, in any case, not on the general premise. Long haul ventures should consistently be conveyed in fiscal summaries at their expense. However, when there's a decay, aside from brief, in worth the drawn out speculation, conveying sum is decreased for perceiving such decrease. Venture Property Venture property is speculations that are made in land or structures which aren't imagined to be utilized essentially for use, or in business tasks of, the contributing organization.  Speculation Treatment on Disposal On special or removal of the venture, the contrast between the conveying cost and continues from the business net of any costs is moved to P&L.  Renaming of Investments Where a drawn out speculation is renamed as a current venture, the exchange is made at conveying sum and lower of cost at the date of such exchange. Where a speculation is renamed from current venture to long haul venture, the exchange is made at the lower of its expense and the reasonable estimation of such venture at the date of such exchange.   Q3) What are the Revelations in the Financial Statements of Investment accounting as per accounting standard 13.A3) Revelations in the Financial Statements The beneath referenced are the exposures in the fiscal reports regarding AS 13 Accounting for Investments is appropriate: (a) Bookkeeping arrangements utilized for deciding conveying measure of speculation  (b) The sums which are remembered for the benefit and misfortune proclamation for: (I) Dividends, premium, and rentals on the speculations introducing the pay from such long haul and current ventures independently. Net pay should be expressed, measure of TDS (charge deducted at source) included under the Advance Taxes Paid (ii) Benefits and misfortunes on the removal of current speculation and the progressions in conveying the measure of the venture (iii) Benefits and misfortunes on the removal of long haul speculation and the progressions in conveying the measure of the venture  (c) Generous restrictions on the privilege of possession, feasibility of the ventures or settlement of pay and continues of removal  (d) The aggregate sum of both the cited and unquoted speculations, giving the all-out market estimation of the cited ventures  (e) Different exposures as unequivocally as needed by the important rule overseeing the organization.  Q4) On first March 1992, XY Corporation Ltd. bought Rs. 30,000, 5% Government Stock at Rs. 95 cum-interest. On first May 1992, the organization sold Rs. 10,000 of Stock at Rs. 97 cum-interest. On fifteenth December 1992, another Rs. 10,000 Stock was sold at Rs. 93 ex-interest. On 31st December 1992, the end date of the monetary year, the market cost of the Stock was Rs. 92. Half-yearly interest is gotten each year as on 30th June and 31st December. Set up a record account in the venture record expecting that the stock exchange book is shut 20 days before the date of installment of interest. Overlook annual duty and financier.A4)In the books of XY Corporation Ltd.5% Govt. Stock Account(Interest Payable: 30th June and 31st December)Dr.                                                                                                                                                                                            Cr.  

    Date

    Particulars

    L F

    Nominal

    Interest

    Principal

    Date

    Principal

    L F

    Nominal

    Interest

    Principal

    1992

    Mar. 1

     

     

    May 1

     

     

    Dec. 31

     

     

     

     

     

     

     

     

     

     

     

     

    1993

    Jan. 1

     

    To Bank A/c  -Purchase at cum-interest

       Profit and Loss A/c   -Profit on Sale

        Bank A/c 

     -Interest directly paid to the purchaser

       Profit and Loss A/c  -Interest for the year transferred

     

     

     

     

     

     

    To Balance b/d

     

    Rs

    30,000

    Rs

    250

     

     

     

     

     

    250

     

     

     

    896

     

     

     

    Rs

    28,2501

     

     

     

    116

     

    1992

    May 1

     

    June 30

     

     

     

    Dec. 31

     

    By Bank A/c –Sale at cum-interest

       Bank A/c  -Interest

    ( Rs. 20,000× 5/100 × 6/12)

    Bank  A/c –Sold at Ex-Interest

       Profit and Loss A/c

       Bank A/c

     -Interest

    ( Rs. 20,000× 5/100 × 6/12)

      Profit and Loss A/c –Loss on Stock Valuation

       Balance c/d

     

    Rs

    10,000

     

     

     

     

     

    10,000

     

     

     

     

     

     

     

     

     

     

    10,000

    Rs

    167

     

    500

     

     

     

    229

     

     

     

    500

     

     

     

     

     

     

     

    Rs

    9,533

     

     

     

     

     

    9,300

     

     

    117

     

     

     

     

    216

     

     

    9,200

    30,000

    1,396

    28,336

    30,000

    1,396

    28,336

     

    10,000

     

    -

     

    9,200

     

     

     

     Workings:
    1. Purchase and Interest on 1.3.1992                     Rs

    Purchase at Cum-Interest                                      28,500

    (Rs. 30,000 × 95/100)

     

    Less: Interest (Rs. 30,000 × 5/100 × 2/12)            250

                                                                                        28,250       

    2.     Sale and Interest on 1.5.1992                               Rs

    Sale at Cum-Interest

    (Rs. 10,000 × 97/100)                                        9,700

     

    Less: Interest (Rs. 10,000 × 5/100 × 4/12)           167

                                                                                         9,553       

    3.     Sale and Interest on 15.12.1992

    Sale at Ex-Interest                                                 

    (Rs. 10,000 × 93/100)                                            9,300

     

    Interest (Rs. 10,000 × 5/100 × 51/2 / 12)              229

    4.     It must be remembered that although the stock was sold on 15.12.1992, the name of the buyer was not recorded in Stock Register due to closing of a stock transfer book, i.e., we received the interest and later on we paid to the buyer personally.

      Q5) On fifteenth March O.P. Ltd. bought Rs. 1,00,000, 9 percent Govt. Stock (interest payable on first April, first July, first October and first January) at 88½ cum-interest. On first August Rs. 20,000 stock is sold at 89 cum-interest and on first September Rs. 30,000 stock is sold at 88¼ Ex-interest. On 31st December, the date of the Balance Sheet, the market cost was Rs. 90. Show the record of the Investment for the year, disregarding Income Tax, Brokerage and so on and making distributions in month.A5)In the books of O.P. Ltd.9% Govt. Stock Account(Interest payable: 1st April and 1st July1st Oct., 1st Jan.)Dr.                                                                                                                                                                                            Cr.  

    Date

    Particulars

    L F

    Nominal

    Interest

    Principal

    Date

    Principal

    L F

    Nominal

    Interest

    Principal

    Mar. 15

     

     

    Aug. 1

     

     

    Sept. 1

     

     

    Dec. 31

     

     

     

     

     

    Jan. 1

     

    To Bank A/c  -Purchase at cum-interest

       Profit and Loss A/c   -Profit on Sale

       Profit and Loss A/c   -Profit on Sale

        Profit and Loss A/c  -Interest for the year transferred

     

     

    To Balance b/d

     

    Rs

    1,00,000

    Rs

    1,875

     

     

     

     

     

     

     

     

    5,423

     

     

    Rs

    86,625

     

     

     

    1255

     

     

    7873

    ……..

    Apr. 1

     

     

     

    July. 1

     

    Aug. 1

     

    Sept. 1

     

    Oct. 1

     

    Dec. 31

     

    By Bank A/c –Interest (Rs. 1,00,000 × 9/100 × 3/12)

      Bank A/c

     –Interest

      Bank A/c –Sold at cum-interest

    Bank A/c –Sold at ex-Interest

       Bank A/c –Interest

       Balance c/d

     

    Rs

     

     

     

     

     

     

    20,000

     

     

    30,000

     

     

    50,000

    Rs

     

    2,250

     

     

     

    2,250

    150

     

     

    450

     

    1,125

    1,125

    Rs

     

     

     

     

     

     

    17,450

     

     

    26,775

     

     

    43,312

    1,00,000

    7,350

    87,537

    1,00,000

    7,350

    87,537

     

    50,000

     

    1,125

     

    43,312

     

     

     

     Workings:
    1. Purchase price and Interest:                                  Rs

    Purchase price at cum-interest  

     

    ( Rs. 10,000 × 881/2 /100)                                         88,500

     

    Less: Interest ( Rs. 10,000 × 9 /100 × 21/2 /12)       1,875

                                                                                              86,625

    2.     Selling Price and Interest                                      Rs

    Selling Price at Cum-Interest

     

    (Rs. 20,000 × 88/100)                                        17,600

     

    Less: Interest (Rs. 20,000 × 9/100 × 1/12           150

                                                                                  17,450                                           

      

    3.     Statement showing the Profit and Loss on Sale of Investment

    Date

     

    Nominal Value

    Principal

    Selling

    Profit

    Loss

    March.   15

    Aug.         1

     

     

     

    Sept. 1

    Purchase

    Sale

    (Rs. 20,000 × 86,625 /1,00,000 )

     

    Sales

    (Rs. 30,000 × 86,625 / 1,00,000)

    Balance

    1,00,000

    20,000

     

    -

    80,000

    30,000

     

    -

    86,625

    -

     

    17,325

    69,300

    -

     

    25,988

    -

     

     

    17,450

     

     

     

    26,775

    -

     

     

    125

     

     

     

    787

    -

     

     

    -

     

     

     

    -

    50,000

    43,312

     

    4.     Selling Price and Interest                    Rs

    Sellign Price at ex-Interest

     

    (Rs. 30,000 × 891/4 / 100)                         26,775

     

    Interest ( Rs. 30,000 × 881/4 / 100)               450

      Q6) On 1.4.2010, Sundar had 25,000 value portions of 'X' Ltd. at a book estimation of ' 15 for every offer (Face esteem ' 10). On 20.6.2010, he bought one more 5,000 portions of the organization at ' 16 for each offer. The heads of 'X' Ltd. declared a reward and rights issue. No profit was payable on these issues. The details of the issue are as per the following: Reward premise 1:6 (Date 16.8.2010). Rights premise 3:7 (Date 31.8.2010) Price ' 15 for every offer. Due date for installment 30.9.2010. Investors can move their privileges in full or to a limited extent. As needs be Sundar offered 33.33% of his privilege to Sekhar for a thought of ' 2 for every offer. Profits: Dividends for the year finished 31.3.2010 at the pace of 20% were proclaimed by X Ltd. what's more, gotten by Sundar on 31.10.2010. Profits for shares procured by him on 20.6.2010 are to be changed against the expense of procurement. On 15.11.2010, Sundar sold 25,000 value shares at a higher cost than expected of ' 5 for each offer. You are needed to plan in the books of Sundar. (1) Investment Account (2) Profit and Loss Account. For your activity, accept that the books are shut on 31.12.2010 and offers are esteemed at normal expense.A6)Books of Sundar Investment Account Equity Shares in X Ltd. 

     

     

    No.

    Amount

     

     

    No.

    Amount

     

     

     

     

     

     

    1.4.2010

     

     

    20.6.2010

     

    16.8.2010

     

     

    30.9.2010

     

     

    15.11.2010

    To Bal b/d

     

    To Bank

     

    To Bonus

     

    To Bank (Rights Shares) To Profit

    25,000

     

     

    5,000

     

    5,000

     

     

    10,000

     

     

       45,000

    3,75,000

     

    80,000

     

     

    1,50,000

     

    50,000

    6,55,000

    30.9.2010

     

     

    31.10.2010

     

     

     

    15.11.2010

     

     

    31.12.2010

    By Bank (Sale of Rights)

    By Bank (dividend

    on shares acquired on 20/6/2010)

    By Bank (Sale of shares)

    By Bal. c/d

     

     

     

     

     

     

     

    25,000

     

     

    20,000

    45,000

    10,000

     

     

    10,000

     

     

     

    3,75,000

     

     

    2,60,000

    6,55,000

    Profit & Loss A/c 

    To Balance c/d

    1,00,000

    By Profit transferred

    50,000

     

      

    By Dividend

    50,000

     

    1,00,000

     

    1,00,000

    Working Notes:(1) Bonus Shares = 25,000  5,0005,000 shares6(2) Right Shares = 25,000 5,000 5,000 3 = 15,000 shares7(1)    Rights shares renounced = 15,000×1/3 = 5,000 shares (4) Dividend received = 25,000×10×20% = 50,000Dividend on shares purchased on 20.6.2010 = 5,000×10×20% = 10,000 is adjusted to Investment A/c(5)      Cost of shares on 31.12.20103,75,000  80,000  1,50,000 10,000 10,000 20,000 =  2,60,00045,000  Q7) On 1.4.2010, Sundar had 25,000 value On 1.4.2010, Mr. Krishna Murty bought 1,000 value portions of ' 100 each in TELCO Ltd. @ ' 120 each from a Broker, who charged 2% financier. He caused 50 paise per ' 100 as cost of offers move stamps. On 31.1.2011 Bonus was pronounced in the proportion of 1 : 2. When the record date of extra offers, the offers were cited at ' 175 for every offer and ' 90 for each offer separately. On 31.3.2011 Mr. Krishna Murty sold extra offers to a Broker, who charged 2% financier.  Show the Investment Account in the books of Mr. Krishna Murty, who held the offers as Current resources and shutting estimation of speculations will be made at Cost or Market esteem whichever is lower. A7) In the books of Mr. Krishna Investment Account for the year ended 31st March, 2011(Scrip: Equity Shares of TELCO Ltd.)Dr. Cr. 

    Date

     

     

    Particulars

    Nominal Value (

    )

    Cost ( )

    Date

    Particulars

    Nominal Value ( )

    Cost ( )

    1.4.2010

    To

     

    Bank A/c

    1,00,000

    1,23,000

    31.3.2011

    By

    Bank A/c

    50,000

    44,100

    31.1.2011

     

    31.3.2011

    To To

     

    Bonus shares Profit & loss A/c

    50,000

     

     

      

    1,50,000

     

        3,100 1,26,100

    31.3.2011

    By

    Balance c/d

    1,00,000

     

     

     

    1,50,000

    82,000

     

     

     

    1,26,100

     

    Working Notes:(i)        Cost of  equity shares purchased on  1.4.2010   =  1,000   120 +  2%  of    1,20,000  +½% of 1,20,000 = 1,23,000(ii)      Sale proceeds of equity shares sold on 31st March, 2011 = 500 90 – 2% of 45,000 = 44,100.(iii)     Profit on sale of bonus shares on 31st March, 2011= Sales proceeds Average cost Sales proceeds = 44,100Average cost = (1,23,000 50,000)/1,50,000 = 41,000 Profit = 44,100 41,000 = 3,100.(iv)    Valuation of equity shares on 31st March, 2011Cost = ( 1,23,000 × 1,00,000)/1,50,000 = 82,000)Market Value = 1,000 shares × 90 = 90,000Closing balance has been valued at 82,000 being lower than the market value.  Q8) Mr. X bought 500 value portions of ' 100 each in Omega Co. Ltd. for ' 62,500 comprehensive of financier and stamp obligation. A few years after the fact the organization made plans to underwrite its benefits and to issue to the holders of value shares, one value reward share for each offer held by them. Preceding capitalisation, the portions of Omega Co. Ltd. were cited at ' 175 for each offer. After the capitalisation, the offers were cited at ' 92.50 per share. Mr. X. sold the extra offers and got at ' 90 for each offer.  Set up the Investment Account in X's books on normal expense premise.A8)                              Investment Account in the books of A                             [Equity shares in Omega Co. Ltd.] 

     

    Nominal Value

    Cost

     

    Nominal Value

    Cost

     

     

    To Cash

    50,000

    62,500

    By Cash Sale

    50,000

    45,000

    To Bonus shares

    50,000

     

    By Balance c/d

    50,000

    31,250

    To P & L A/c

     

    13,750

     

     

     

     

    1,00,000

    76,250

     

    1,00,000

    76,250

    To Balance b/d

    50,000

    31,250

     

     

     

    Note :  The total cost of 1,000 share including bonus is  62,500 Therefore, cost of 500 shares (carried forward) is 500  62,500 = 31,2501,000. Cost being lower than the market price, shares are carried forward at cost.  Q9)  On first January 1994, X Ltd. held as speculation Rs. 50,000, 6% Government Stock costing Rs. 47,000 On 31st March, an acquisition of Rs. 2,00,000 of same Government Stock was made at Rs. 95 cum-interest. On first July, the organization sold Rs. 1,00,000 stock Rs. 96. On first October, a further Rs. 70,000 of the speculation was sold at Rs. 98 cum-interest. The market cost of the stock on 31.12.94 was Rs. 99 (ex-interest). Half yearly interest is payable on 30th June and 31st December consistently. Set up the Investment Ledger of the organization disregarding personal assessment and business.A9)In the books of X Ltd.6% of Govt. Stock Account(Interest payable: 30th June and 31st Decenber)Dr.                                                                                                                                                                                            Cr.  

    Date

    Particulars

    LF

    Nominal

    Interest

    Principal

    Date

    Particulars

    LF

    Nominal

    Interest

    Principal

    1994

    Jan. 1

    Mar. 31

     

     

    July. 31

     

     

    Oct. 1

     

     

    Dec. 31

     

     

     

    1995

    Jan.1

     

    To Balance b/d

      Bank A/c –Purchase at cum-Interest

       Profit and Loss A/c    -Profit on Sale

       Profit and Loss A/c  -Profit on Sale

       Profit and Loss A/c   -Interest for the year transferred

     

    To Balance b/d

     

    Rs

    50,000

    2,00,000

    Rs

    -

    3,000

     

     

     

     

     

     

     

     

     

    7,950

    Rs

    47,000

    1,87,000

     

     

     

     

    2,250

     

    2,100

     

    1994

    June. 30

     

     

     

    July. 1

     

    Oct. 1

     

    Dec. 31

     

    By Bank A/c –Interest (Rs, 2,50,000 × 6/100 × 6/12)

       Bank A/c –Sale at Ex-Interest

       Bank A/c  -Sale at Cum-Interest

       Bank A/c   -Interest (Rs. 80,000 × 6/100 × 6/12)

        Balance c/d

     

    Rs

     

     

     

     

    1,00,000

     

    70,000

     

     

     

     

     

    80,000

    Rs

    7,500

     

     

     

    -

     

    1,050

     

    2,400

     

     

     

    -

    Rs

    -

     

     

    -

    96,000

     

    67,556

     

     

     

     

     

    74,800

    2,50,000

    10,950

    2,38,350

    2,50,000

    10,950

    2,38,350

     

    80,000

     

    -

     

    74,800

     

     

     

     Workings:
    1. Purchase and Interest on 30.3.1994             Rs

    Purchase at Cum-Interest

    (Rs. 2,00,000 × 95/100)                                1,90,000

     

    Less: Interest (Rs. 2,00,000 × 6/100 × 3/12)     3,000

    3 .   FIFO method is followed here. As per market price, the value of stock should be Rs. 80,000 × 99/100 = Rs. 79,200 which is more than the cost price of Rs. 74,800, hence, cost price is taken as it is lower.

                                                                                  1,87,000

      

    2.     Statement showing the Profit and Loss on Sale of Investment:

    Date

     

    Nominal

    Rs

    Principal

    Rs

    Selling

    Rs

    Profit

    Rs

    Loss

    Rs

    1.1.1994

    31.3.1994

     

    1.7.1994

     

     

     

    1.10.1994

     

     

    31.12.1999

    Balance

    Purchase

     

    Sale

    (50,000 × 1,87,000 / 2,00,000)

     

    Sale

    (70,000 × 1,87,000 / 2,00,000)

    Balance

    50,000

    2,00,000

    2,50,000

    50,000

     

    50,000

    47,000

    1,87,000

    2,34,000

    47,000

                         93,750

    46,750

    -

     

     

    96,000

     

     

     

     

     

    67,550

    -

     

     

    2,250

     

     

     

     

     

    2,100

    -

     

     

    -

     

     

     

     

     

    -

    1,50,000

    70,000

     

    -

    1,40,250

    -

     

    65,450

    80,000

    74,800

      10) On first January 1994, X Ltd. held as theory Rs. 50,000, 6% Government Stock costing Rs. 47,000 On 31st March, a procurement of Rs. 2,00,000 of same Government Stock was made at Rs. 95 cum-interest. On first July, the association sold Rs. 1,00,000 stock Rs. 96. On first October, a further Rs. 70,000 of the theory was sold at Rs. 98 cum-interest. The market cost of the stock on 31.12.94 was Rs. 99 (ex-interest).  Half yearly interest is payable on 30th June and 31st December reliably. Set up the Investment Ledger of the association dismissing individual evaluation and business.A10)In the books of X Ltd.Investment Account    Dr.                                                                                                                                                      Cr. 

    Date

    Particulars

    Nominal

    Interest

    Principal

    Date

    Particulars

    Nominal

    Interest

    Principal

    1995

    Jan. 1

    May. 15

     

     

     

     

     

     

     

    Jan. 15

     

     

     

    Dec. 31

     

     

     

     

    1996

    Jan.1

     

    To Balance b/d

       Bonus Shares (10,000 + 2 = 5,000 × Rs. 10)

       Bank A/c (Share Application money @ Rs7 on 2,000 shares)

      Bank A/c (Share Call money @ Rs. 6 on 2,000 shares)

       Profit and Loss A/c (Dividend transferred ) (bal.fig.)

     

     

    To Balance b/d

    Rs

    1,00,000

    50,000

     

     

     

    20,000

     

     

     

    -

     

     

     

    -

    Rs

    -

    -

     

     

     

    -

     

     

     

    -

     

     

     

    29,000

    Rs

    1,25,000

    -

     

     

     

    14,000

     

     

     

    12,000

     

     

     

    -

     

    1995

    May. 25

     

     

    Oct. 15

     

     

     

    Dec. 31

     

    By Bank A/c (4,000 Right Shares sold @ Rs. 2)

      Bank A/c (Dividend received @ 20% on Rs. 1,00,000)

       Balance c/d

    Rs

    -

     

     

    -

     

     

     

    1,70,000

    Rs

    -

     

     

    20,000

     

     

     

    -

    Rs

    8,000

     

     

    -

     

     

     

    1,43,000

    1,70,000

    20,000

    1,51,000

    1,70,000

    20,000

    1,51,000

     

    1,70,000

     

    -

     

    1,43,000

     

     

     

    Note: 1. Total Right 10,000 × 3/5 = Rs. 6,000 – Rights exercised 2,000 = Rights Sold 4,000.