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292 Corporate Finance BRILLIANT’S

7. Profit on Sale of 25,000 shares on 15.11.2016 `
Sale Proceeds 3,75,000
3,75,000 80,000 1,50,000 10,000   
Less: Average Cost × 25,000 3,30,556
45,000
Profit on Sale 44,444

Illustration 3.3.12
On 1.6.2016 X acquired 3,000 equity shares of ` 10 each in Flora Ltd. for ` 60,000 on cum-right
basis: / 1.6.2016 H$mo X Zo < 10 à{V Ho$ 3,000 B{³dQ>r eo¶g© H$‘-amBQ> AmYma na < 60,000 ‘| àmá {H$¶o&
Flora Ltd. declared: / âbmoam {b{‘Q>oS> Zo Kmo{fV {H$¶m…
(a) A one for three bonus issue on 1.7.2016; and / 1.7.2016 H$mo VrZ ~moZg Bí¶y Ho$ {bE EH$ VWm

(b) A one for four rights issue on 1.9.2016 at 20% premium
1.9.2016 H$mo 20% àr{‘¶‘ na Mma amBQ²>g Bí¶y Ho$ {bE EH$

X: NPP
(a) Took up half the rights issue; / amBQ> Bí¶y H$m AmYm {b¶m&
(b) Sold the remaining rights for ` 8 per share; / < 8 à{V eo¶a Ho$ {bE eof amBQ²>g ~oMo&
(c) Sold half of its total shareholdings on 31.12.2016 for ` 37,000.
31.12.2016 H$mo < 37,000 H$s BgH$s Hw$b eo¶a hmopëS>¨½g H$m AmYm ~oMm&
You are required to prepare the Investment Account for the year ended 31.12.2016.
AmnH$mo 31.12.2016 H$mo g‘má hþE df© Ho$ {bE B§doñQ>‘|Q> AH$mC§Q> V¡¶ma H$aZm h¡&
Solution:
In the Books of X
Dr. Investment in Equity Shares of Flora Ltd. Account Cr.

Date Particulars No. Divi- Cost Date Particulars No. Divi- Cost
dend (`) dend (`)

1.6.16 To Bank A/c 1.9.16 By Bank A/c
(Purch.) 3,000 - 60,000 (WN4) - - 4,000
1.7.16 To Bonus 31.12.16 By Bank A/c
Issue 1,000 - - (WN5) 2,250 - 37,000
1.9.16 To Bank A/c 31.12.16 By Bal. c/d
(Rights) 500 - 6,000 (WN5) 2,250 - 31,000
31.12.16 To Statement
of P/L - - 6,000
4,500 - 72,000 4,500 - 72,000