Page 278 - Corporate Finance PDF Final new link

278 Corporate Finance BRILLIANT’S

If there is a profit on sale of investment
¶{X {Zdoe Ho$ {dH«$¶ na bm^ hmoVm h¡&
Investment Account Dr.
To Profit & Loss Account/Statement of Profit & Loss
If there is a loss on sale of investment
¶{X {Zdoe Ho$ {dH«$¶ na hm{Z hmoVr h¡&
Profit & Loss Account/Statement of Profit & Loss Dr.
To Investment Account
Illustration 3.3.4
On 1st April, 2017 Lotus Ltd. had current investment of ` 3,00,000 6% Government Stock at
` 94 (face value of ` 100). Interest is payable half-yearly on 31st March and 30th September. The
company sold ` 90,000 of the stock at ` 95 ex-interest on 1st June, 2017. Draw up 6% Government
Stock Account in the Investment Ledger of the company for the year ended 31st March, 2018.
Ignore brokerage and income tax. The stock was quoted at ` 96 ex-interest at the stock exchange
on that date. NPP
1 Aà¡b 2017 H$mo bmoQ>g {b{‘Q>oS> Zo < 94 (’o$g d¡ë¶y < 100) na < 3,00,000 6% JdZ©‘|Q> ñQ>m°H$ H$m
H$a§Q> B§doñQ>‘|Q> {H$¶m Wm& ã¶mO 31 ‘mM© VWm 30 {gV§~a H$mo AY©dm{f©H$ ê$n go ^wJVmZ {H$¶m OmVm h¡& H§$nZr Zo 1 OyZ
2017 H$mo < 95 E³g B§Q>aoñQ> na < 90,000 H$m ñQ>m°H$ ~oMm& 31 ‘mM© 2018 H$mo g‘má hwE df© Ho$ {bE H§$nZr Ho$
B§doñQ>‘|Q> boOa ‘| 6% JdZ©‘|Q> ñQ>m°H$ AH$mC§Q> {ZH$m{bE& ~«moH$aoO VWm B§H$‘ Q>¡³g H$s AdhobZm H$s{OE& ñQ>m°H$ Cg
{XZm§H$ H$mo ñQ>m°H$ E³gM|O na < 96 E³g-B§Q>aoñQ> na H$moQ> {H$¶m Wm&

Solution:
In the Books of Lotus Ltd.
6% Government Stock Account
Dr. [Interest Payable: 31th March & 30th September] Cr.

Date Particulars Nominal Inte- Cost Date Particulars Nominal Inte- Cost
Value rest (`) Value rest (`)

1.4.17 To Bal. b/d 3,00,000 - 2,82,000 1.6.17 By Bank A/c 90,000 900 85,500
01.06.17 To State. 30.9.17 By Bank A/c - 6,300 -
of P&L - 13,500 900 31.3.18 By Bank A/c - 6,300 -
31.3.18 By Bal. c/d 2,10,000 - 1,97,400
3,00,000 13,500 2,82,900 3,00,000 13,500 2,82,900
On 1st June, 2017, 6% Government Stock of ` 90,000 was sold @ ` 95 ex-interest.
This price of ` 95 excludes accrued interest for April and May.

6 2
Total accrued interest = ` 90,000   = ` 900.
100 12
Amount will be received from the buyer (` 95 × 900) + 900 = ` 86,400.