Mr. Harsh provides the following details relating to his holding in 10% debentures (face value of 100 each) of Exe Ltd. held as current assets:…

Investment Account of Mr. Harsh for the year ending on 31-3-2024 (Scrip: 10% Debentures of Exe Limited) (Interest Payable on 30th June and 31st December) Date Particulars Nominal Value Interest ₹ Cost ₹ Date Particulars Nominal Value Interest ₹ Cost ₹ 1.4.23 To Balance b/d 12,50,000 31,250 12,25,000 30.6.23 By Bank (21,500 x 100 x 10% x 1/2) 1,07,500 1.6.23 To Bank (ex-Interest) (W.N.1) 9,00,000 37,500 8,90,820 31.12.24 By Bank (33,500 x 100 x 10% x 1/2) 1,67,500 1.11.23 To Bank (cum-Interest) (W.N.2) 12,00,000 40,000 13,53,800 31.1.24 By Bank (W.N.3) 13,50,000 11,250 14,58,900 31.1.24 To Profit & Loss A/c (W.N.3) 1,34,920 31.3.24 By Balance c/d (W.N.4) 20,00,000 50,000 21,45,640 31.3.24 To Profit & Loss A/c (Bal. fig.) 2,27,500 33,50,000 3,36,250 36,04,540 33,50,000 3,36,250 36,04,540 Working Notes: 1. Purchase of debentures on 1.6.23 Interest element = 9,000 x 100 x 10% x 5/12 = 37,500 Investment element = (9,000 x 98) + [1% (9,000 x 98)] = 8,90,820 2. Purchase of debentures on 1.11.2023 Interest element = 12,000 x 100 x 10% x 4/12 = 40,000 Investment element = 12,000 X 115 X 101% less 40,000 = 13,53,800 3. Profit on sale of debentures as on 31.1.24 ₹ Sales price of debentures (13,500 × ₹ 110) 14,85,000 Less: Brokerage @ 1% (14,850) 14,70,150 Less: Interest (1,35,000/12) (11,250) 14,58,900 Less: Cost of Debentures [(12,25,000 + (890820 X 1,00,000/9,00,000)] (13,23,980) Profit on sale 1,34,920 4. Valuation of closing balance as on 31.3.2024 Market value of 20,000 Debentures at 115 = 23,00,000 Cost of 8,000 Debentures = 8,90,820/9,000 X 8,000 = 7,91,840 12,000 Debentures = 13,53,800 Total 21,45,640 Value at the end is 21,45,640, i.e., which is less than market value of 23,00,000.