Investment Questions
Investment Questions
Que. 1 On 31st March, 2001, X Ltd. purchased Rs. 2,00,000 6% Government stock (face value of Rs. 100
each) at Rs. 95 each cum – interest. Half yearly interest is payable on 30 th June and 31st December
every year.
Show entries in the investment ledger of X Ltd. for its financial year ended on 31 st December,
2001 ignoring tax and brokerage.
Sol:
Date Particulars Nomina Interest Cost Date Particulars Nominal Interest Cost
l Value (Rs.) (Rs.) Value (Rs.) (Rs.)
31.03.01 To Bank A/c 2,00,00 3,000 1,87,000 30.06.01 By Bank A/c - 6,000 -
0
31.12.01 To P&L A/c - 9,000 - 31.12.01 By Bank A/c - 6,000 -
By Bal. c/d 2,00,000 - 1,87,000
2,00,00 12,000 1,87,000 2,00,000 12,000 1,87,000
0
Ex – Interest (Ex = Without)
Que. 2 On 31st March, 2001, X Ltd. purchased Rs. 2,00,000 6% Government stock (face value of Rs. 100
each) at Rs. 95 each ex – interest. Half yearly interest is payable on 30 th June and 31st December every
year.
Show entries in the investment ledger of X Ltd. for its financial year ended on 31 st December,
2001 ignoring tax and brokerage.
Sol:
Date Particulars Nomina Interest Cost Date Particulars Nominal Interest Cost
l Value (Rs.) (Rs.) Value (Rs.) (Rs.)
31.03.01 To Bank A/c 2,00,00 3,000 1,90,000 30.06.01 By Bank A/c - 6,000 -
0
31.12.01 To P&L A/c - 9,000 - 31.12.01 By Bank A/c - 6,000 -
By Bal. c/d 2,00,000 - 1,90,000
2,00,00 12,000 1,90,000 2,00,000 12,000 1,90,000
0
Que. 3 On 1st April, 2001, X Ltd. had Rs. 3,00,000 6% Government stock (face value of Rs. 100 each) at
Rs. 94 each. Interest is payable half yearly on 31st March and 30th September every year.
The company sold Rs. 90,000 of the stock at Rs. 95 cum – interest on 1 st June 2001. Draw up 6%
Government Stock Account in the investment ledger of the company for the year ended 31 st March
2002. Ignore brokerage and income tax. The stock was quoted at Rs. 96 ex – interest at the stock
exchange on that date
Date Particulars Nomina Interest Cost Date Particulars Nominal Interest Cost
l Value (Rs.) (Rs.) Value (Rs.) (Rs.)
01.04.01 To Bal. b/d 3,00,00 - 2,82,000 01.06.01 By Bank A/c 90,000 900 84,600
0
31.12.01 To P&L A/c - 13,500 - 30.09.01 By Bank A/c - 6,300 -
31.03.02 By Bank A/c - 6,300 -
31.03.02 By Bal. c/d 2,10,000 - 1,97,400
3,00,00 13,500 2,82,000 3,00,000 13,500 2,82,000
0
Que. 4 On 1st April, 2001, X Ltd. had Rs. 3,00,000 6% Government stock (face value of Rs. 100 each) at
Rs. 94 each. Interest is payable half yearly on 31st March and 30th September every year.
The company sold Rs. 90,000 of the stock at Rs. 95 ex – interest on 1 st June 2001. Draw up 6%
Government Stock Account in the investment ledger of the company for the year ended 31 st March
2002. Ignore brokerage and income tax. The stock was quoted at Rs. 96 ex – interest at the stock
exchange on that date
Dr. Cr.
Que. 5 On 1st January 2001, X Ltd. held an investment of Rs. 50,000 at 6% Government stock costing Rs.
47,000 (face value Rs. 100 each). On 31 st March, a purchase of Rs. 2,00,000 same Government stock
was made at Rs. 95 cum – interest. On 1 st July, the company sold Rs. 1,00,000 stock @ Rs 96. On 1 st
October, a further Rs. 70,000 of the investment was sold at Rs. 98 cum – interest. The market price of
the stock on 31.12.2001 was Rs. 99 (ex – interest).
Half – yearly interest is payable on 30 th June and 31st December every year. Prepare the Investment
Leger of the Company ignoring income – tax and brokerage.
Stock price will be valued on the basis of cost or market price whichever is lower. In this case, cost of
1,87,000
stock (FIFO basis) is Rs. 74,800 X 80,000 but market price is Rs. 79,200 (Rs. 99 X 800).
2,00,000
Therefore, the value of stock on 31st December, 2001 will be Rs. 74,800 (being lower of the two)
Que. 6
Que. 7