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Subject: Financial Accounts

Topic: Investment Account By: Questionscastle Academic Team Document Code: CA/IPCC/ACC/00019
Q 1. Mr. I an investor furnishes the following details relating to his holding in 6% Government bonds. Opening Balance as on 01-01-1995 face value `60,000, Cost `59,000. 01-03-1995 100 units purchased ex-interest at `98. 01-07-1995 Sold 200 Ex-Interest out of the original holding at `100. 01-10-1995 Purchased 50 units at `98 cum-interest. 01-11-1995 Sold 200 units ex-interest at `99 out of the original holding. Interest dates are 30th Sept and 31st Mar. Mr. I closes his books on 31st Dec every year. Prepare a investment A/c Kolkatta investment held 400, 12% debentures of `100 each in Acme Ltd. as on 1st Apr 1995 at a cost of `50,000. Interest is payable on 30 June and 31st Dec every year. On 1st June 1995 200 debentures are purchased cum-interest for `21,400. On 1st Nov 1995, 300 debentures are sold ex- interest `28,650. On 30th Nov 1995, 200 debentures are purchased ex-interest for `19,200. On 31st Dec 1995, 300 debentures are sold for `32,250 cum-interest. Prepare investment a/c at cost (applying FIFO) valuing closing stock as on 31st Mar 1995. The debentures are quoted at par on 31st Mar 1996. On 01-01-1995, X Ltd. have 10,000 equity shares of `10 each in Y Ltd. purchased for `1,25,000. The company unlike investment companies does not make any apportionment of dividends in between capital and revenue. On 15-05-1995, the Y Ltd. made a bonus issue of 1 share fully paid against 2 shares held on 15-05-1995. In addition right shares at 3 shares for 5 held were issued on the same day at a premium of `3 per share, `7 to be paid on application and rest on 1st call after one month. These shares are not to be ranked for dividend for the year ending 30th June 1995. 2,000 right shares were to be taken up by X Ltd. balance right being sold at `2 each on 25-05-1995. On 15-10-1995 the company declared a dividend of 20% for the year ending 30th June 1995. Make an investment a/c for X Ltd. Ignore Tax. Bhasin and Co. held on 1st Jan 2002 `60,000 of 7% Govt. Bond (2009) at `57,000. Three months interest accrued. On 31st May 2002 the company purchased a further `24,000 of the bond at `96 (net) cum-interest. On 31st July 2002 `18,000 of the bonds were sold at `94 (net) ex-interest. On 31st Nov 2002 `12,000 of the bonds were sold at `96 (net) cum-interest. Interest on the bonds is paid on 31st Mar and 30th Sept each year and was credited by the bank on 4th April and 5th Oct respectively. The price of bonds on 31st Dec 2002 was `96. Prepare an investment a/c. Investment Group Ltd. held on 01-01-1992 `60,000 of 12% Tax Free government securities of `100 each of `56,500. On 01-06-1992 the company purchased a further of `40,000 securities at `96.5 cum-interest brokerage being 2.5%. On 31-07-1992 `50,000 of the security was sold at `94.5 ex-interest, brokerage being 2%. On 01-12-1992 `20,000 of the security was again sold for `96 cum-interest. Interest on security was paid each year on 31st Mar and 30th Sept and was credited by the bank of 3rd April and 4th Oct respectively. The price of the security on 31-12-1992 was `96. Accounts are closed on 31st Dec. Prepare an Investment A/c.

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On 1st Apr 1992, Batra Finance Ltd. held 12% debentures in Vinod Fiber Ltd. of the face value of `25,000 at a cost of `20,000. Market value on that date was `22,500. Interest is payable on 31st Dec each year. On 1st Nov 2002 debentures of the nominal value `15,000 were purchased for `12,500 ex-interest and on 1st Dec 2002 debentures of nominal value `5,000 were sold cum-interest for `4,800. On 1st Jan 2002 debentures of `15,000 nominal value were bought at `14,500. The value of the debentures on 31st Mar 2003 was `92. Draw Investment A/c. Roshan Lal holds 1,000 9% debentures of `100 each in Greaves Cotton Ltd. as on 1st Jan 2002 at a cost of `1,25,000. Interest is payable on 31st Mar and 30th Sept each year. On 1st Mar 2002, 600 debentures are purchased for `63,200 cum-interest. On 1st Aug 2002, 800 debentures are sold for `76,400 ex-interest. On 31st Aug 2002 400 debentures are purchased for `38,500 ex-interest. On 30th Sept 2002 600 debentures are sold for `63,600 cum-interest. Prepare investment a/c at cost (applying FIFO) valuing closing stock as on 31st Dec 2002. The debentures are quoted at par on 31st Mar 2002. Mrs. Madhuri purchased `24,000 5% Bharat Debenture stock at `90 cum-interest on 1st Mar 2001. Interest is payable on 31st Mar and 30th Sept each year. Stamp and expenses on purchase amounted to `20 and brokerage at the rate 2% was charged on cost. Interest for the half year was received on the due date. On 1st Sept `10,000 of the stock was sold for `92 ex-interest less brokerage @ 2%. On 30th Sept `8,000 stock was purchased at `91 ex-interest plus brokerage at 2% and charges `10. On 1st Dec `6,000 stock was sold `94 cum interest less brokerage 2%. The market price of the stock on 31st Dec was 88.5%. Show the investment a/c for the year ending 31st Mar 2001 assuming FIFO method. Calculation should be made in the multiple of rupee. Mrs. Maduri hold stock as current asset.

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