Financial Accounting, TYBMS Finance
St. Andrew’s College of Arts, Science & Commerce
Chapter 4: Investment Accounting
Investment in Equity Shares
Q.9 On 1-4-2018 Aditya Dhanraj had 80,000 equity shares in L&T Ltd. The face value of the
shares was ₹ 10 each but the book value was ₹ 24 per share.
On 1-6-2018 Aditya purchased 20,000 equity shares in T Ltd. At a premium of ₹ 6 per share.
On 1-7-2018, the directors of T Ltd. Issued bonus shares at the rate of one share for every
four shares held.
On 1-01-2019 Aditya purchased 15,000 right shares in T Ltd. of ₹ 10 each at ₹ 15 per share.
On 31-01-2018 he sold 40,000 equity shares in T Ltd. of ₹ 10 each at ₹ 30 per share. Show
Investment A/c as it would appear in Aditya’s books for the year ended 31-03-2019.
Q.10 On 1st April 2020 Mrs. Rashmi holds 50,000 Equity Shares of ₹ 10 each in HUL Ltd., at
a cost of ₹ 8,00,000. On 1st July 2020 she purchased 10,000 additional shares of the same
Company at a cost of ₹ 1,60,000. On 1st October 2020 Company issued bonus of one share
for every six shares held as on that date.
On 1st January 2021 she purchased right shares, announced by Company at the rate of two
shares for every five shares held as on that date at ₹ 12 each.
On 31st January 2021 she purchased 12,000 additional shares of the same Company at a cost
of ₹ 2,16,000. On 1st February 2021 she sold 30,000 shares for ₹ 20 each.
Prepare Investment in Equity shares account in the books of Mrs. Rashmi for the year ended
31st March 2021.
Q.11 1st April, 2021 Mr. Vikram had 30,000 equity shares in Pharma Ltd. Face value of the
share was ₹ 10 each but purchase price was ₹ 14 per share. On 1st June, 2021, Vikram
purchased 6,000 additional equity shares of the same company for a price of ₹ 16 per share.
On 31st July, 2021; the directors of the company announced a bonus and rights issue. Bonus
was declared at the rate of one equity share for every six shares held. Bonus shares were
received on 8th August, 2021.
Right shares to be issued to the existing holders on 11th August, 2021 on the following terms:
a) Rights offered were at the rate of one share for every three shares held at ₹ 15 Per
share. Full amount was payable by 30th September, 2021.
b) Existing shareholders may to the extent of their entitlement, either wholly or in part,
transfer their rights, to outsiders.
c) Vikram exercised his option and subscribed for 60% of his entitlement and the
balance of rights, he sold to Kiara for a consideration of ₹ 2.50 per share.
d) Dividend for the year ended 31” March, 2021 at the rate of 14% was declared by the
company and received on 25th October, 2021.
e) On 15th November, 2021 he sold 25,000 shares at ₹ 15 per share.
Prepare Investment Account of equity shares in Pharma Ltd. For the year ended 31st March,
2022 in the Books of Mr. Vikram. Apply AS-13. The market price of an equity share as on
31st March, 2022 was ₹ 14.
Q.12 On 1st April 1019, 5000 Equity Shares of ₹ 10 each of Vipro Ltd. Were held as
investment by Mrs. Geet at a cost of ₹ 48,000. On 30th April 2019 she purchased 1,000 of
such equity shares @ ₹ 12 per share.
On 5th June 2019, the Company declared Bonus shares in the ratio of one share for every two
shares held.
On 30th June 2019, the Company made right issue in the ratio of one share for every two
shares held on payment of ₹ 13 per share. Geet subscribed to 40% of the shares and sold the
balance of her rights @ ₹ 3 per share.
On 22nd October 2019, Dividend was received @ ₹ 2 per share for the year ended 31st March
2019. On 1st November 2019, 1,000 of such shares were sold by Mrs. Meera @ ₹ 20 per
share.
Prepare: “Equity Shares in Vipro Ltd.” Account in the books of Mrs. Geet for the year ended
31st March 2020. (Round off figures to the nearest rupee)
Q.13 The following transactions of Mr. Narayan took place during the year ended 31-3-2022:
1st April 2021 Purchased ₹ 12,00,000, 8% Bonds at ₹ 80.50 cum-interest. Interest is payable
on 1st November and 1st May every year. Face value of each bond is ₹ 100.
12th April 2021 1,00,000 Equity Shares of ₹ 10 each in X Ltd. For ₹ 40,00,000.
1st May 2021 Received half-year’s Interest on 8% bonds.
15th May 2021 X Ltd. Made Bonus issue of three Equity shares for every two shares held.
15th June 2021 Mr. Narayan sold 1,25,000 Bonus shares for ₹ 20 each.
1st Oct. 2021 Sold ₹ 3,00,000, 8% Bonds at ₹ 81 ex-interest.
1st Nov. 2021 Received half-year’s bond interest.
Prepare 8% Bond account and Equity shares in ‘X’ Ltd. Account in the books of Mr. Narayan
for the year ended 31-3-2022.
