Ms. Neha had 20,000 Equity shares in Nexus Ltd. at a book value of 2,40,000 on 01.04.2024. Face value of shares is 10 per share. The Directors of…

Alternative -1 Considering the Examinee has calculated Average Cost directly for shares sold and for Closing Balance of Shares: Investment Account in Books of Ms. Neha (Scrip: Equity Shares in Nexus Ltd.) No. Amount No. Amount ₹ ₹ 1.4.2024 To Bal b/d 20,000 2,40,000 1.11.2024 By Bank (Sale of shares) 11,500 2,99,000 30.4.2024 To Bonus 4,000 - 31.3.2025 By Bal. c/d 21,500 2,38,455 31.8.2024 To Bank (Rights Shares) 9,000 1,26,000 1.11.2024 To P&L A/c (Profit on sale of shares) 1,71,455 33,000 5,37,455 33,000 5,37,455 Working Notes: (1) Bonus Shares = (20,000) /5 = 4,000 shares (2) Right Shares = (20,000 +4,000) / 4 × 3 = 18,000 shares (3) Rights shares sold = 18,000×50% = 9,000 shares (4) Dividend received = 20,000×10×15% = 30,000 will be taken to P&L statement (5) Average Cost of shares sold: Average Cost = (2,40,000+1,26,000) / 33,000 x 11,500 = 1,27,545 (6) Profit on sale of 11,500 shares = Sales proceeds – Average cost Sales proceeds = 2,99,000 Profit = 2,99,000- 1,27,545= 1,71,455. (7) Cost of shares on 31.3.2025 (2,40,000 +1,26,000) / 33,000 x 21,500 = 2,38,455 (8) Sale of rights amounting - 27,000 (3x 9,000 shares) will not be shown in investment A/c but will directly be taken to P & L statement. Alternative - 2 Calculate Average Cost per Unit first and then worked out the cost of shares sold and closing balance of shares using average unit cost: Investment Account in Books of Ms. Neha (Scrip: Equity Shares in Nexus Ltd.) No. Amount No. Amount ₹ ₹ 1.4.2024 To Bal b/d 20,000 2,40,000 1.11.2024 By Bank (Sale of shares) 11,500 2,99,000 30.4.2024 To Bonus 4,000 - 31.3.2025 By Bal. c/d 21,500 2,38,435 31.8.2024 To Bank (Rights Shares) 9,000 1,26,000 1.11.2024 To P&L A/c (Profit on sale of shares) 1,71,435(*) 33,000 5,37,435 33,000 5,37,435 (*) rounding off difference of 30adjusted i.e. 1,71,465 – 30 = 1,71,435 Working Notes: (1) Bonus Shares = (20,000) /5 = 4,000 shares (2) Right Shares = (20,000 +4,000) / 4 × 3 = 18,000 shares (3) Rights shares sold = 18,000×50% = 9,000 shares (4) Dividend received = 20,000×10×15% = 30,000 will be taken to P&L statement (5) Average Cost per Share: = (2,40,000 + 1,26,000) / (20,000 + 4,000 + 9,000) = (3,66,000 / 33,000) = 11.09 per share (rounded off to 2-decimal places) Average Cost = (11,500 × 11.09) = 1,27,535 (6) Profit on sale of 11,500 shares = Sales proceeds – Average cost Sales proceeds = 2,99,000 Profit = 2,99,000 - 1,27,535 = 1,71,465. (7) Cost of shares on 31.3.2025 21,500 x 11.09 = 2,38,435 (8) Sale of rights amounting - 27,000 (3x 9,000 shares) will not be shown in investment A/c but will directly be taken to P & L statement.