PAPER – 1 : ACCOUNTING

Question No. 1 is compulsory.

Answer any four questions from the remaining five questions.
Wherever necessary, suitable assumptions may be made and indicated in answer by the
candidates.
Working Notes should form part of the answer.
Question 1
Answer the following questions:
(a) Joy Ltd. purchased 20,000 kilograms of Raw Material @ ` 20 per kilogram during the year
2020-21. They have furnished you with the following further information for the year ended
31st March, 2021:
Particulars Units Amount (`)
Opening Inventory:
Finished Goods 2,000 1,00,000
Raw Materials 2,200 44,000
Direct Labour 3,06,000
Fixed Overheads 3,00,000
Sales 20,000 11,20,000
Closing Inventory:
Finished Goods 2,400
Raw Materials 1,800
The plant has a capacity to produce 30,000 Units of finished product per annum.
However, the actual production of finished products during the year 2020-21 was 20,400
Units. Due to a fall in the market demand, the price of the finished goods in which the
raw material has been utilized is expected to be sold @ ` 40 per unit. The replacement
cost of the raw material was ` 19 per kilogram.
You are required to ascertain the value of closing inventory as at 31st March, 2021 as per
AS 2.
(b) (i) A Limited has contracted with a supplier to purchase machinery which is to be
installed at its new plant in four months' time. Special foundations were required for
the machinery which were to be prepared within this supply lead time. The cost of
the site preparation and laying foundations were ` 2,10,000. These activities were
supervised by an Architect during the entire period, who is employed for this purpose
at a salary of ` 35,000 per month. The machinery was purchased for ` 1,27,50,000
2 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

and a sum of ` 2,12,500 was incurred towards transportation charges to bring the
machinery to the plant site. An Engineer was appointed at a fees of ` 37,500 to
supervise the installation of the machinery at the plant site. You are required to
ascertain the amount at which the machinery should be capitalized in the books of A
Limited.
(ii) B Limited, which operates a major chain of retail stores, has acquired a new store
location. The new location requires substantial renovation expenditure. Management
expects that the renovation will last for 4 months during which the store will be closed.
Management has prepared the budget for this period including expenditure related to
construction and re-modelling costs, salary of staff who shall be preparing the store
before its opening and related utilities cost. How would such expenditure be treated
in the books of B Limited ?
(c) Alps Limited has received the following Grants from the Government during the year ended
31st March, 2021:
(i) ` 120 Lacs received as Subsidy from the Central Government for setting up an
Industrial undertaking in Medak, a notified backward area.
(ii) ` 15 Lacs Grant received from the Central Government on installation of Effluent
Treatment Plant.
(iii) ` 25 Lacs received from State Government for providing Medical facilities to its
workmen during the pandemic.
Advise Alps Limited on the treatment of the above Grants in its books of Account in
accordance with AS-12 "Government Grants".
(d) Prepare cash flow statement of Gama Limited for the year ended 31st March, 2021 in
accordance with AS-3(Revised) from the following cash account summary :
Cash summary Account
Inflows ` ('000) Outflows ` ('000)
Opening Balance 945 Payment to suppliers 54,918
Receipts from Customers 74,682 Purchase of Investments 351
Sale of Investments (Cost 459 Property, plant and 6,210
` 4,05,000) equipment acquired
Issue of Shares 8,100 Wages and salaries 1,863
Sale of Property, Plant and 3,456 Payment of Overheads 3,105
equipment
Taxation 6,561
Dividends 2,160
 PAPER – 1 : ACCOUNTING 3

Repayment of Bank 6,750

Overdraft
Interest paid on Bank 1,350
Overdraft
Closing Balance 4,374
87,642 87,642
(4 Parts x 5 Marks = 20 Marks)
Answer
(a) Statement Showing the Computation of Value of Closing Inventory
Value of Closing Finished Goods
Particulars Amount (`)
Cost of Raw Material consumed (20,400 units X ` 20 per kg) 4,08,000
Direct Labour 3,06,000
Fixed Overheads (3,00,000/30,000 x 20,400) 2,04,000
Cost of Production 9,18,000
Cost of Closing Inventory of Finished Goods per unit 45
(` 9,18,000/20,400)
Net Realizable Value (NRV) per unit 40
Since net realizable value is less than cost, closing inventory of Finished Goods will be
valued at ` 40 per unit
Value of Closing Raw Materials
As NRV of finished goods is less than its cost, the relevant raw material will be valued at
its replacement cost, which is the best available measure of its NRV i.e. @ ` 19 per kg.
Therefore, value of closing inventory would be as under:
Finished Goods 2,400 units @ ` 40/- per unit ` 96,000
Raw Materials 1,800 kg @ ` 19/- per kg ` 34,200
Total ` 1,30,200
Working Note:
Calculation of raw material consumed during the year
Particulars Unit (Kg)
Opening Inventory 2,200
Purchases 20,000
Less: Closing Inventory (1,800)
Raw Material Consumed 20,400
4 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

(b) (i) Statement Showing the Computation of the amount at which the Machinery
should be capitalized in the books of A Limited
Particulars Amount
(`)
Purchase cost of machinery Given 1,27,50,000
Add: Site Preparation Cost Given 2,10,000
Architect’s Salary Specific / Attributable 1,40,000
overheads for 4 months
(` 35,000 x 4)
Initial Delivery Cost Transportation 2,12,500
Professional Fees for Installation Engineer’s Fees 37,500
Total Cost of Machinery to be 1,33,50,000
capitalized
(ii) Management should capitalize the costs of construction and remodelling the store,
because they are necessary to bring the store to the condition necessary for it to be
capable of operating in the manner intended by management. The store cannot be
opened without incurring the remodelling expenditure, and thus the expenditure
should be considered part of the asset. However, if the cost of salaries, utilities and
storage of goods are in the nature of operating expenditure that would be incurred if
the store was open, then these costs are not necessary to bring the store to the
condition necessary for it to be capable of operating in the manner intended by
management and should be expensed.
(c) (i) As per AS 12 ‘Accounting for Government Grants’, where the government grants are
in the nature of promoters’ contribution i.e., they are given with reference to the total
investment in an undertaking or by way of contribution towards its total capital outl ay
and no repayment is ordinarily expected in respect thereof, the grants are treated as
capital reserve which can be neither distributed as dividend nor considered as
deferred income. In the given case, the subsidy received from the Central
Government for setting up an industrial undertaking in Medak is neither in relation to
specific fixed asset nor in relation in revenue. Thus, the amount of ` 120 Lacs should
be credited to capital reserve.
(Note: Subsidy for setting up an industrial undertaking is considered to be in the
nature of promoter’s contribution)
(ii) As per AS 12 ‘Accounting for Government Grants’, two methods of presentation in
financial statements of grants related to specific fixed assets are regarded as
acceptable alternatives –
(a) The grant is shown as a deduction from the gross value of the asset concerned
in arriving at its book value. The grant is thus recognised in the profit and loss
 PAPER – 1 : ACCOUNTING 5

statement over the useful life of a depreciable asset by way of a reduced

depreciation charge. Where the grant equals the whole, or virtually the whole,
of the cost of the asset, the asset is shown in the balance sheet at a nominal
value.
(b) Grants related to depreciable asset are treated as deferred income which is
recognised in the profit and loss statement on a systematic and rational basis
over the useful life of the asset.
In the given case, ` 15 Lacs was received as grant from the Central Government for
installation of Effluent Treatment Plant. Since the grant was received for a fixed asset,
either of the above methods can be adopted.
(iii) ` 25 lacs received from State Government for providing medical facilities to its
workmen during the pandemic is a grant received in nature of revenue grant. Such
grants are generally presented as a credit in the profit and loss statement, either
separately or under a general heading such as “Other Income”. Alternatively, ` 25
lacs may be deducted in reporting the related expense i.e., employee benefit
expense.
(d) Gama Limited
Cash Flow Statement
For the Year Ended 31 st March 2021
Particulars Amount Amount
(`’000) (`’000)
Cash flow from Operating Activities:
Cash receipts from customers 74,682
Cash payments to suppliers (54,918)
Cash payments for wages & salaries (1,863)
Cash payments of overheads (3,105)
Cash Generated from Operations 14,796
Payment of Taxation (6,561)
Net Cash from Operating Activities 8,235
Cash Flow from Investing Activities:
Proceeds from sale of investments 459
Proceeds from sale of Property, Plant and Equipment 3,456
Purchase of Investments (351)
Purchase of Property, Plant and Equipment (6,210)
Net Cash Used in Investing Activities (2,646)
6 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

Cash Flow from Financing Activities:

Proceeds from issue of shares 8,100
Payment of Dividend (2,160)
Repayment of Bank Overdraft (6,750)
Interest paid on Bank Overdraft (1,350)
Net Cash Used in Financing Activities (2,160)
Net Increase in Cash & Cash Equivalent 3,429
Cash and Cash Equivalent in the Beginning of the year 945
Cash and Cash Equivalent in the end of the year 4374
Question 2.
Mr. Z has made following transactions during the financial year 2020-21:
Investment 1: 8% Corporate Bonds having face value ` 100.
Date Particulars
01-06-2020 Purchased 36,000 Bonds at ` 86 cum-interest. Interest is payable on 30th
September and 31st March every year
15-02-2021 Sold 24,000 Bonds at ` 92 ex-interest
Interest on the bonds is received on 30th September and 31st March.
Investment 2 : Equity Shares of G Ltd having face value ` 10
Date Particulars
01-04-2020 Opening balance 8000 equity shares at a book value of ` 190 per share
01-05-2020 Purchased 7,000 equity shares@ ` 230 on cum right basis; Brokerage of
1% was paid in addition.
15-06-2020 The company announced a bonus issue of 2 shares for every 5 shares held
01-08-2020 The company made a rights issue of 1 share for every 7 shares held at
` 230 per share. The entire money was payable by 31.08.2020
25-08-2020 Rights to the extent of 30% of his entitlements was sold @ ` 75 per share.
The remaining rights were subscribed.
15-09-2020 Dividend @ ` 6 per share for the year ended 31.03.2020 was received on
16.09.2020. No dividend payable on Right issue and Bonus issue.
01-12-2020 Sold 7 ,000 shares @ 260 per share. Brokerage of 1% was incurred extra.
25-01-2021 Received interim dividend @ ` 3 per share for the year 2020-21.
31-:03-2021 The shares were quoted in the stock exchange @ ` 260.
 PAPER – 1 : ACCOUNTING 7

Both investments have been classified as Current investment in the books of Mr. Z. On 15th May
2021, Mr. Z decides to reclassify investment in equity shares of Z  Ltd. as Long term Investment.
On 15th May 2021, the shares were quoted in the stock exchange @ ` 180.
You are required to:
(i) Prepare Investment Accounts in the books of Mr. Z for the year 2020-21, assuming that
the average cost method is followed.
(ii) Profit and loss Account for the year 2020-21, based on the above information.
(iii) Suggest values at which investment in equity shares should be reclassified in accordance
with AS 13. (20 Marks)
Answer
I. In the books of Mr. Z
Investment in 8% Corporate Bonds Account
For the period 01 April 2020 to 31 March 2021
Date Particulars Nos Interest Amount Date Particulars Nos Interest Amount
(`) (`) (`) (`)
1/6/20 To Bank 36,000 48,000 30,48,000 30/9/20 By Bank A/c 1,44,000
A/c (WN1) (Interest
36,000 x 100 x
8% x 6/12)
15/2/21 To Profit & 1,76,000 15/2/21 By Bank A/c 24,000 72,000 22,08,000
Loss A/c (WN2)
(WN 3)
31/3/21 To Profit & 2,16,000 31/3/21 By Bank A/c 48,000
Loss A/c (Interest
12,000 x 100 x
8% x 6/12)
By Balance c/d 12,000 10,16,000
(WN 4)
Total 36,000 2,64,000 32,24,000 Total 36,000 2,64,000 32,24,000

Note: For computing the interest on the bonds sold on 15 Feb 2021, if number of days
(138 days) is taken instead of months, the interest received on 15.02.2021 should be
`72,592 and the total interest transferred to Profit & Loss Account should be ` 2,16,592.


Wrongly printed as Z Ltd. in the question paper. It should have been given as G Ltd.
8 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

Investment in Equity Shares of G Ltd

For the period 1st April 2020 to 31 March 2021
Date Particulars Nos Dividend Amount Date Particulars Nos Dividen Amount
(`) (`) d (`) (`)
01/4/20 To Balance 8,000 15,20,000 16/9/20 By Bank A/c 48,000 42,000
b/d (WN 7)
01/5/20 To Bank A/c 7,000 16,26,100 1/12/20 By Bank A/c 7000 18,01,800
(WN 5) (WN 8)
15/6/20 To Bonus 6,000 25/1/21 By Bank A/c 48,300
Shares (WN 10)
25/8/20 To Bank A/c 2,100 4,83,000
(Right
Shares)
(WN 6)
01/12/20 To Profit & 7,14,800
Loss A/c
(Sale of
shares)
(WN 9)
31/3/21 To Profit & 96,300
Loss A/c
31/3/21 By Balance c/d 16,100 25,00,100
(WN 11)
Total 23,100 96,300 43,43,900 Total 23,100 96,300 43,43,900

Working Notes
1. Computation of the Interest element in the bonds purchased on 01 June 2020
No of Bonds purchased 36,000
Face value per bond ` 100
Face value of the bonds purchased ` 36,00,000
Interest Rate 8%
Interest Amount 36,00,000 x 8% x 2/12
` 48,000
Cum-interest per bond ` 86
Value of bond excluding interest 36,000 x 86 – 48,000
` 30,48,000

2. Computation of the Interest element in the bonds sold on 15 Feb 2021

No of Bonds sold 24,000
Face value per bond ` 100
 PAPER – 1 : ACCOUNTING 9

Face value of the bonds sold ` 24,00,000

Interest Rate 8%
Interest Amount 24,00,000 x 8% x 4.5/12
= ` 72,000

3. Computation of Profit on Sale of Bonds on 15 Feb 2021

No of Bonds sold 24,000
Face value per bond ` 100
Ex- interest Rate per bond ` 92
Sales proceeds ` 22,08,000
Average Cost of Bonds (30,48,000/36,000) x 24,000
` 20,32,000
Profit on sale of bonds Sale Proceeds – Average Cost
22,08,000 – 20,32,000
` 1,76,000
4. Valuation of Bonds as on 31 March 2021
No of Bonds held as on 31 Mar 2021 12,000
Average Cost of Bonds (30,48,000/36,000) x 12,000
` 10,16,000

5. Computation of the cost of the equity shares purchased on 01 May 2020

No of shares purchased 7,000
Cum right price per share ` 230
Cost of purchase ` 16,10,000
Brokerage @1% ` 16,100
Cost including brokerage ` 16,26,100
6. Right Shares
No of Right Shares Issued (8,000+7,000+6,000)/7 = 3,000 shares
No of right shares sold 3,000 shares x 30% = 900 shares
Proceeds from sale of right shares to be 900 shares x ` 75 = ` 67,500
credited to statement of profit & loss
No of right shares subscribed 3,000-900 = 2,100 shares
Amount of right shares subscribed 2,100 x 230 = ` 4,83,000
10 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

7. Computation of Dividend Received on 16 Sept 2020

No of shares held during the period of dividend 8,000 shares
Dividend per share `6
Dividend Amount 8,000 x 6 = ` 48,000
No of shares received after the period of dividend 7,000 shares
(excluding bonus & right shares)
Dividend per share `6
Dividend Amount 7,000 x 6 = ` 42,000
The amount of dividend for the period for which the shares were not held by the
investor has been treated as capital receipt. Thus ` 42,000 shall be treated as capital
receipt
8. Sale Proceeds for the shares sold on 1st Dec. 2020
No of shares sold 7,000 Shares
Sale price per share ` 260
Proceeds from sale of share 7,000 x 260 = ` 18,20,000
Less: Brokerage @ 1% ` 18,200
Net Sale Proceeds ` 18,01,800
9. Profit on sale of shares on 1st Dec. 2020
Sales Proceeds ` 18,01,800
Average Cost (15,20,000+16,26,100+4,83,000-42,000)/23,100x7000
= ` 10,87,000
Profit on sale of shares Sales Proceeds – Average Cost
= ` 18,01,800-10,87,000
= ` 7,14,800
10. Computation of Amount of Interim Dividend
No of shares held 8,000+7,000+6,000+2,100-7,000
= 16,100
Dividend per share ` 3 per share
Dividend Received 16,100 shares x ` 3 per share
= ` 48,300
 PAPER – 1 : ACCOUNTING 11

11. Valuation of Shares as on 31 March 2021

Cost of Shares (15,20,000 + 16,26,100 + 4,83,000 – 42,000) / 23,100
x 16,100
= 25,00,100
Market Value of Shares ` 260 x 16,100 = ` 41,86,000
Closing stock of equity shares has been value at ` 25,00,100 i.e. cost being lower
than its market value.
(II) Profit & Loss Account (Extract)
For the period 01 April 2020 to 31 March 2021
Particulars Amount (`) Particulars Amount (`)
To Balance c/d 12,70,600 By Investment in 8% Corporate 1,76,000
Bonds Account (Profit on sale of
bonds)
By Investment in 8% Corporate 2,16,000
Bonds Account (Interest on bonds)
By Sale of Right Shares 67,500
By Investment in Equity Shares of G 7,14,800
Ltd (Profit on sale of shares)
By Investment in Equity Shares of G 96,300
Ltd (Dividend Income)
(III) As per AS 13, when investments are classified from Current Investments to Long term
Investments, transfer is made at Cost and Fair value, whichever is less (as on the date of
transfer). So, in the given case valuation shall be done as follows:
Date of reclassification/transfer – 15 May 2021
Per Unit Cost of 16,100 shares held – ` 25,00,100/16,100 shares – ` 155.29
Market Price/Fair Value per share – ` 180
As the cost per unit is lower than its fair value, the shares are to be transferred at its cost
i.e., at ` 155.29 per share on 15 May 2021
Note:
1. In the eight last line of the question, investment in equity shares of G Ltd. was wrongly
printed as Z Ltd. in the question paper. In the above solution, it has been considered
as investment in G Ltd. If considered as Investment in equity shares in Z Ltd. (some
other investment and not investment in G Ltd.), then the cost of the investme nt for
shares in Z Ltd. will not be available.
12 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

2. The entire amount of sale proceeds from rights has been credited to Profit and Loss
account in the above solution. However, the sale proceeds of rights in respect of
7,000 shares (purchased cum right on 1.5.20) can be applied to reduce the carrying
amount of such investments (without crediting it to profit and loss account)
considering that the value of these shares has reduced after becoming their ex -right.
In that case, ` 22,500 (67,500X 7/21) will be applied to reduce the carrying amount
of investment and ` 45,000 will be credited to profit and loss account.
Question 3
(a) Manohar of Mohali has a branch at Noida to which the goods are supplied from Mohali but
the cost thereof is not recorded in the Head Office books. On 31st March, 2020 the Branch
Balance Sheet was as follows:
Liabilities ` Assets `
Creditors Balance 62,000 Debtors Balance 2,24,000
Head Office 1,88,000 Building Extension A/c
Closed by transfer to H.O. A/c -
Cash at Bank 26,000
2,50,000 2,00,000
During the six months ending on 30-09-2020, the following transactions took place at
Noida:
` `
Sales 2,78,000 Manager's salary 16,400
Purchases 64,500 Collections from debtors 2,57,000
Wages Paid 24,000 Discounts allowed 16,000
Salaries (inclusive of 15,600 Discount earned 4,600
advance of 5,000)
General Expenses 7,800 Cash paid to creditors 88,500
Fire Insurance (Paid for one 11,200 Building Account (further 14,000
year) payment)
Remittance to H.O. 52,900 Cash in Hand 5,600
Cash at Bank 47,000
Set out the Head Office Account in Noida Books and the Branch Balance Sheet as on
30.09.2020. Also give journal entries in the Noida books. (10 Marks)
 PAPER – 1 : ACCOUNTING 13

(b) Mr. Arun runs a business of readymade garments. He closes the books of accounts on
31st March. The Balance Sheet as on 31st March, 2020 was as follows :
Liabilities ` Assets `
Capital A/c 5,05,000 Furniture 50,000
Creditors 1,02,500 Closing Stock 3,50,000
Debtors 1,25,000
Cash in Hand 35,000
Cash at Bank 47,500
6,07,500 6,07,500
You are furnished with following information :
(1) His sales, for the year ended 31st March, 2021 were 20% higher than the sales of
previous year, out of which 20% sales was cash sales.
Total Sales during the year 2019-20 were ` 6,25,000
(2) Payments for all the purchases were made by cheques only.
(3) Goods were sold for cash and credit both. Credit customers pay by cheques only.
(4) Deprecation on furniture is to be charged 10% p.a.
(5) Mr. Arun sent to the bank the collection of the month at the last date of each month
after paying salary of ` 2,500 to the clerk, office expenses ` 1,500 and personal
expenses ` 625.
Analysis of bank pass book for the year ending 31st March, 2021 disclosed the following:
`
Payment to creditors 3,75,000
Payment to rent up to 31 st March, 2021 20,000
Cash deposited into bank during the year 1,00,000
The following are the balances on 31st March, 2021:
`
Stock 2,00,000
Debtors 1,50,000
Creditors for goods 1,82,500
On the evening of 31st March, 2021, the cashier absconded with the available cash in the
cash book.
14 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

You are required to prepare Trading and Profit and Loss A/c for the year ended
31st March, 2021 and Balance Sheet as on that date. All the working should form part of
the answer. (10 Marks)
Answer
(a) Journal Entries in the Books of Noida Branch
Particulars Debit Credit
(`) (`)
Salary Advance A/c Dr. 5,000
To Salaries A/c 5,000
(Being the amount paid as advance adjusted by debit to
Salary Advance A/c)
Prepaid Insurance A/c (11,200 X 6/12) Dr. 5,600
To Fire Insurance A/c 5,600
(Being the six months premium transferred to the Prepaid
Insurance A/c)
Head Office A/c Dr. 1,44,900
To Purchases A/c 64,500
To Wages A/c 24,000
To Salaries A/c (15,600 - 5000) 10,600
To General Expenses A/c 7,800
To Fire Insurance A/c (11,200 X 6/12) 5,600
To Manager’s Salary A/c 16,400
To Discount Allowed A/c 16,000
(Being the transfer of various revenue accounts to the HO
A/c for closing the accounts)
Sales A/c Dr. 2,78,000
Discount Earned A/c Dr. 4,600
To Head Office A/c 2,82,600
(Being the transfer of various revenue accounts to HO)
Head Office A/c Dr. 14,000
To Building A/c 14,000
(Being the transfer of amounts spent on building
extension to HO A/c)
 PAPER – 1 : ACCOUNTING 15

Head Office Account

2020 Particulars Amount 2020 Particulars Amount
(`) (`)
Sept 30 To Cash Remittance 52,900 April 1 By Balance b/d 1,88,000
To Sundries* 1,44,900 By Sundries* (Revenue) 2,82,600
(Revenue)
To Building A/c 14,000
To Balance c/d 2,58,800
Total 4,70,600 Total 4,70,600
* Instead of using Sundries (Revenue) A/c, the concerned revenue accounts can be posted
in the ledger.
Balance Sheet of Noida Branch
As at 30th Sept 2020
Liabilities Amt (`) Assets Amt (`)
Creditors 33,400 Debtors 2,29,000
Head Office A/c 2,58,800 Salary Advance 5,000
Prepaid Insurance 5,600
Building Extension A/c transferred to HO
Cash in Hand 5,600
Cash at Bank 47,000
Total 2,92,200 Total 2,92,200
Working Notes
Cash and Bank Account
Particulars Amt (`) Particulars Amt (`)
To Balance b/d 26,000 By Wages 24,000
To Collection from debtors 2,57,000 By Salaries 15,600
By Insurance 11,200
By General Expenses 7,800
By HO A/c 52,900
By Manager’s Salary 16,400
By Creditors 88,500
By Building A/c 14,000
By Balance c/d
16 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

- Cash in Hand 5,600

- Cash at bank 47,000
Total 2,83,000 Total 2,83,000
Debtors Account
Particulars Amt (`) Particulars Amt (`)
To Balance b/d 2,24,000 By Cash Collection 2,57,000
To Sales A/c 2,78,000 By Discount (Allowed) 16,000

By Balance c/d 2,29,000

Total 5,02,000 Total 5,02,000
Creditors Account
Particulars Amt (`) Particulars Amt (`)
To Cash A/c 88,500 By Balance b/d 62,000
To Discount (Earned) 4,600 By Purchases 64,500
To Balance c/d 33,400
Total 1,26,500 Total 1,26,500
Note:
Since the date of payment of fire insurance has not been mentioned in the question, it is
assumed that it was paid on 01 April 2020. Alternative answer considering otherwise also
possible.
(b) In the books of Mr. Arun
Trading and Profit and Loss Account for the Year Ended 31 st March 2021
Particulars Amount Particulars Amount
(`) (`)
To Opening Stock 3,50,000 By Sales (W.N. 3)
To Purchases (W.N.1) 4,55,000 Credit 6,00,000
To Gross Profit (b.f.) 1,45,000 Cash 1,50,000
By Closing Stock 2,00,000
Total 9,50,000 Total 9,50,000
To Salary (` 2,500 x 12) 30,000 By Gross Profit 1,45,000
To Rent 20,000
To Office Expenses (` 1,500 x 12) 18,000
 PAPER – 1 : ACCOUNTING 17

To Loss of Cash (W.N.6) 29,500

To Depreciation on furniture 5,000
To Net Profit (b.f.) 42,500
Total 1,45,000 Total 1,45,000
Balance Sheet
As on 31 st March 2021
Liabilities Amount Assets Amount
(`) (`)
Arun’s Capital 5,05,000 Furniture 50,000
Add: Profit 42,500 Less: Depreciation (5,000) 45,000
Less: Drawings (7,500) 5,40,000 Stock 2,00,000

(` 625 X12) Debtors 1,50,000

Creditors 1,82,500 Cash at bank 3,27,500
Total 7,22,500 Total 7,22,500
Working Notes:
(1) Calculation of Purchases
Creditors Account
Particulars Amount (`) Particulars Amount (`)
To Bank A/c 3,75,000 By Balance b/d 1,02,500
To Balance c/d 1,82,500 By Purchases (Bal Fig) 4,55,000
Total 5,57,500 Total 5,57,500
(2) Calculation of Total Sales
Particulars Amount (`)
Sales for the year 2019-20 6,25,000
Add: 20% increase 1,25,000
Total sales for the year 2020-21 7,50,000
(3) Calculation of Credit Sales
Particulars Amount (`)
Total Sales 7,50,000
Less: Cash sales (20% of total sales) (1,50,000)
Credit sales 6,00,000
18 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

(4) Calculation of cash collected from debtors

Debtors Account
Particulars (`) Particulars (`)
To Balance b/d 1,25,000 By Bank A/c (Bal Fig) 5,75,000
To Sales A/c 6,00,000 By Balance c/d 1,50,000
Total 7,25,000 Total 7,25,000
(5) Calculation of closing balance of cash at bank
Bank Account
Particulars (`) Particulars (`)
To Balance b/d 47,500 By Creditors A/c 3,75,000
To Debtors A/c 5,75,000 By Rent A/c 20,000
To Cash A/c 1,00,000 By Balance c/d (b.f) 3,27,500
Total 7,22,500 Total 7,22,500
(6) Calculation of the amount of cash defalcated by the cashier
Particulars Amount (`)
Cash Balance as on 1st April 2020 35,000
Add: Cash sales during the year 1,50,000
Less: Salary (30,000)
Office Expenses (18,000)
Drawings of Arun (7,500)
Cash deposited into bank during the year (1,00,000)
Cash Balance as on 31 March 2021 (defalcated by the cashier) 29,500
Question 4
The following is the Trial Balance of H Ltd., as on 31st March, 2021:
Dr. Cr.
Equity Capital (Shares of ` 100 each) 8,05,000
5,000, 6% preference shares of ` 100 each 5,00,000
9% Debentures 4,00,000
General Reserve 40,00,000
Profit & Loss A/c (of previous year) 72,000
 PAPER – 1 : ACCOUNTING 19

Sales 60,00,000
Trade Payables 10,40,000
Provision for Depreciation on Plant & Machinery 1,72,000
Suspense Account 40,000
Land at cost 24,00,000
Plant & Machinery at cost 7,70,000
Trade Receivables 19,60,000
Inventories (31-03-2020) 9,50,000
Bank 2,30,900
Adjusted Purchases 22,32,100
Factory Expenses 15,00,000
Administration Expenses 3,00,000
Selling Expenses 14,00,000
Debenture Interest 36,000
Goodwill 12,50,000
1,30,29,000 1,30,29,000
Additional Information:
(i) The authorised share capital of the company is :
5,000, 6% preference shares of ` 100 each 5,00,000
10,000, equity shares of ` 100 each 10,00,000
Issued equity capital as on 1st
April 2020 stood at ` 7,20,000, that is 6,000 shares fully
paid and 2,000 shares ` 60 paid. The directors made a call of ` 40 per share on 1st October
2020. A shareholder could not pay the call on 100 shares and his shares were then forfeited
and reissued @ ` 90 per share as fully paid.
(ii) On 31st March 2021, the Directors declared a dividend of 5% on equity shares, transferring
any amount that may be required from General Reserve. Ignore Taxation.
(iii) The company on the advice of independent valuer wishes to revalue the land at
` 36,00,000.
(iv) Suspense account of ` 40,000 represents amount received for the sale of some of the
machinery on 1-4-2020. The cost of the machinery was ` 1,00,000 and the accumulated
depreciation thereon being ` 30,000.


This should have been given as 31.3.2021.
20 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

(v) Depreciation is to be provided on plant and machinery at 10% on cost.

(vi) Amortize 1/5th of Goodwill.
You are required to prepare H Limited's Balance Sheet as on 31-3-2021 and Statement of Profit
and Loss with notes to accounts for the year ended 31-3-2021 as per Schedule III of the
Companies Act, 2013. Ignore previous years' figures & taxation. (20 Marks)
Answer
H Ltd
Balance Sheet as at 31st March 2021
Particulars Note No Amount in `
Equity and Liabilities
I. Shareholders’ Funds
a. Share Capital 1 13,00,000
b. Reserves and Surplus 2 53,91,900
II. Non-Current Liabilities
a. Long Term Borrowings 3 4,00,000
III. Current Liabilities
a. Trade Payables 4 10,40,000
b. Other Current Liabilities 5 70,000
Total 82,01,900
Assets
I. Non-Current Assets
a. Property, Plant and Equipment 6 40,61,000
b. Intangible Assets 7 10,00,000
II. Current Assets
a. Inventories 9,50,000
b. Trade Receivables 19,60,000
c. Cash and Cash equivalents 2,30,900
Total 82,01,900
Statement of Profit and Loss for the year ended 31st March 2021
Particulars Note No Amount in `
I. Revenue from operations 60,00,000
Total Revenue 60,00,000
 PAPER – 1 : ACCOUNTING 21

II. Expenses
Purchases (adjusted) 22,32,100
Finance Costs 8 36,000
Depreciation and Amortization 9 3,17,000
Other Expenses 10 32,30,000
Total Expenses 58,15,100
III. Profit/(Loss) for the period 1,84,900
Notes to Accounts (Amount in `)
1 Share Capital
a. Authorized Capital
5,000, 6% Preference shares of ` 100/- each 5,00,000
10,000 Equity Shares of `100/- each 10,00,000
15,00,000
b. Issued & Subscribed Capital
5,000, 6% Preference shares of `100/- each 5,00,000
8,000, Equity shares of `100/- each 8,00,000
Total 13,00,000
2 Reserves & Surplus
Capital Reserve (100 X (90-40)) 5,000
Revaluation Reserve (36,00,000-24,00,000) 12,00,000
General Reserve 40,00,000
Surplus 1,84,900
Add: Balance from previous year 72,000
Less:
Dividends declared (70,000)
Profit/(Loss) carried forward to Balance Sheet 1,86,900
Total 53,91,900
3 Long-Term Borrowings
Secured
9% Debentures 4,00,000
4 Trade Payables 10,40,000
22 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

5 Other Current Liabilities

Dividend Payable
Preference Dividend 30,000
Equity Dividend 40,000
Total 70,000
6 Property, Plant and Equipment
Land
Opening balance 24,00,000
Add: Revaluation Adjustment 12,00,000
Closing Balance 36,00,000
Plant and Machinery
Opening Balance 7,70,000
Less: Disposed off (1,00,000)
Depreciation (2,09,000)
Closing Balance 4,61,000
Total 40,61,000
7 Intangible Assets
Goodwill 12,50,000
Less: Amortized (1/5th) (2,50,000)
Total 10,00,000
8 Finance Costs
Debenture Interest 36,000
9 Depreciation and Amortization
Plant and Machinery 67,000
Goodwill 2,50,000
Total 3,17,000
10 Other Expenses
Factory Expenses 15,00,000
Selling Expenses 14,00,000
Administrative Expenses 3,00,000
Loss on sale of Plant and Machinery
Book Value
(1,00,000-30,000) 70,000
 PAPER – 1 : ACCOUNTING 23

Less: Sale Value (40,000) 30,000

Total 32,30,000
Note
1. The inventories (31.3.20) amounting ` 9, 50,000 (given in the trial balance of the question)
should have been as closing inventory i.e. as on 31.3.21. In the above solution, this
inventory has been considered as closing inventory i.e. for 31.3.21. If this is considered as
inventory of 31.3.20, the closing inventory (as on 31.3.21) will not be available for the
balance sheet as on 31.3.21 and in that case, the balance sheet will not tally without using
suspense account amounting ` 9,50,000.
2. The financial statements given in the above answer include adjustment for dividend
declared on 31st March, 2021, strictly, as per the information given in the question.
However, practically dividends are declared in the annual general meetings which take
place after the reporting date.
Question 5
(a) The firm, M/s K Creations has two Departments, Dyed fabric and readymade garments.
Readymade garments are made by the firm itself. Both dyed fabric and readymade
garments have independent market. Some of readymade garment department's
requirement is supplied by Dyed Fabric Department at its usual Selling Price.
From the following figures, prepare Departmental Trading and Profit & Loss Account for
the year ended 31st March 2021.
Particulars Dyed Fabric Readymade
Department garments
department
Opening stock as on April 1, 2020 5,40,000 15,20,000
Purchases (excluding inter department transfers) 20,12,080 1,50,00,000
Sales (excluding inter department transfers) 31,06,000 3,12,50,000
Transfer to Readymade garment 5,00,000 -
Direct wages 3,00,000 67,30,000
Direct expenses 1,00,000 19,50,000
Plant and Equipment for dyeing/stitching readymade 5,00,000 15,00,000
garments (WDV as on April 1, 2020)
Rent and warehousing 4,50,000 12,00,000
Stock as on March 31st 2021 6,00,000 22,50,000
The following further information are available for necessary consideration:
24 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

(i) The Stock in Readymade garments department may be considered as consisting of

60% of dyed fabric and 40% of Other Expenses.

(ii) The Dyed Fabric Department earned a Gross Profit @ 30% in 2019-2020.
(iii) On the plant and equipment, Depreciation @ 20% p.a. to be provided.
(iv) The following expenses incurred for both the departments were not apportioned
between the departments:

`
(a) Salaries 2,70,000

(b) Advertisement expenses 90,000

(c) General expenses 8,00,000
(v) Salaries in 1:2 ratio, Advertisement expenses in the turnover ratio and General
expenses in 1:3 ratio are to be apportioned between the Dyed Fabric Department and
Readymade Department respectively. (10 Marks)
(b) AB Limited (a listed company) recently made a public issue in respect of which the following
information is available:
(i) No. of partly convertible 8% debentures issued 3,00,000; face value and issue price
` 100 per debenture.
(ii) Convertible portion per debenture- 60%, date of conversion- on expiry of 7 months
from the date of closing of issue.
(iii) Date of closure of subscription lists 1-5-2020, date of allotment 1-6-2020, rate of
interest on debenture 8% payable from the date of allotment, market value of equity
share as on date of conversion ` 60 (Face Value ` 10).
(iv) Underwriting Commission 1%

(v) No. of debentures applied for 2,50,000.

(vi) Interest payable on debentures half-yearly on 30th September and 31st March.
Write relevant journal entries for all transactions arising out of the above during the year
ended 31st March, 2021 (including cash and bank entries). (10 Marks)
 PAPER – 1 : ACCOUNTING 25

Answer
(a) M/s K Creations
Departmental Trading and Profit & Loss Account
For the Year Ended 31 st March 2021
Particulars Dyed Fabric Readymade Total Particulars Dyed Fabric Readymade Total
Department Garments Department Garments
Department Department
(`) (`) (`) (`) (`) (`)
To Opening Stock 5,40,000 15,20,000 20,60,000 By Sales 31,06,000 3,12,50,000 3,43,56,000
To Purchases 20,12,080 1,50,00,000 1,70,12,080 By Transfer 5,00,000 5,00,000
to
Readymade
Garments
To Transfer from 5,00,000 5,00,000 By Closing 6,00,000 22,50,000 28,50,000
Dyed Fabric Stock
Department
To Direct Wages 3,00,000 67,30,000 70,30,000
To Direct Expenses 1,00,000 19,50,000 20,50,000
To Depreciation  1,00,000 3,00,000 4,00,000
To Gross Profit 11,53,920 75,00,000 86,53,920
Total 42,06,000 3,35,00,000 3,77,06,000 Total 42,06,000 3,35,00,000 3,77,06,000
To Rent and 4,50,000 12,00,000 16,50,000 By Gross 11,53,920 75,00,000 86,53,920
Warehousing Profit
To Salaries 90,000 1,80,000 2,70,000
To Advertisement 8,137 81,863 90,000
Expenses
To General 2,00,000 6,00,000 8,00,000
Expenses
To Net Profit 4,05,783 54,38,137 58,43,920
Total 11,53,920 75,00,000 86,53,920 Total 11,53,920 75,00,000 86,53,920

Profit and Loss Account (Combined)

Particulars Amt (`) Particulars Amt (`)
To Unrealized Profit (WN) 1,58,400 By Net Profit 58,43,920
To General Net Profit 56,85,520
Total 58,43,920 Total 58,43,920


Shown here as it relates with property, plant & equipment used for dyeing/stitching garments.
26 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

Calculation of Stock Reserve

Rate of Gross Profit of Dyed Fabric Department for the year 2020-21
= 11, 53,920 X (31, 06,000+5, 00,000) X 100 = 32%
Closing stock of Dyed Fabric in Readymade Garments Department
= 22, 50,000 x 60% = ` 13, 50,000
Stock reserve required for unrealized profit @ 32% on closing stock
= 13, 50,000 x 32% = ` 4, 32,000
Stock reserve for unrealized profit included in opening stock of Readymade Garments
Department = ` 15, 20,000 x 60% x 30% = ` 2, 73,600
Additional stock reserve required = ` 4, 32,000 - ` 2, 73,600 = ` 1, 58,400
(b)
Date Particulars Debit (`) Credit (`)
1.05.2020 Bank A/c Dr. 2,50,00,000
To Debenture Application A/c 2,50,00,000
(Being application money received on
2,50,000 debentures @ `100/- each)
1.06.2020 Debenture Application A/c Dr. 2,50,00,000
Underwriters A/c Dr. 50,00,000
To 8% Debentures A/c 3,00,00,000
(Being allotment of 2,50,000
debentures to applicants and 50,000
debentures to underwriters)
1.06.2020 Underwriting Commission A/c Dr. 3,00,000
To Underwriters A/c 3,00,000
(Being commission payable to
underwriters @ 1% on ` 3,00,00,000)
1.06.2020 Bank A/c Dr. 47,00,000
To Underwriters A/c 47,00,000
(Being amount received from
underwriters in settlement)
1.06.2020 Debenture Redemption Investments 18,00,000
A/c Dr. 18,00,000
To Bank A/c
(3, 00,000 x 100 x 15% x 40% - Being
investments for redemption purposes)
 PAPER – 1 : ACCOUNTING 27

30.09.2020 Debenture Interest A/c Dr. 8,00,000

To Bank 8,00,000
(Being interest paid on debentures for 4
months @ 8% on ` 3,00,00,000)
30.11.2020 8% Debentures A/c Dr. 1,80,00,000
To Equity Share Capital A/c 30,00,000
To Securities Premium A/c 1,50,00,000
(Being conversion of 60% of the
debentures into shares of ` 60 each
with a face value of `10/-)
31.03.2021 Debenture Interest A/c Dr. 7,20,000
To Bank A/c 7,20,000
(Being interest paid on debentures for 6
months @ 8%)
Working Note:
Calculation of Debenture Interest for the half year ended 31st March, 2021
On ` 1, 20, 00,000 for 6 months @ 8% = `4, 80,000
On ` 1, 80, 00,000 for 2 months @ 8% = ` 2, 40,000
`7, 20,000
Question 6
Answer any four of the following:
(a) A trader commenced business on April 1, 2020 with ` 120,000, represented by 6000 units
of a certain product at ` 20 per unit. During the year 2020-21 he sold these units at ` 30/-
per unit and had withdrawn ` 60,000. The price of the product at the end of financial year
was ` 25/- per unit. Compute retained profit of the trader under the concept of physical
capital maintenance at current cost. Also state, whether answer would be different if the
trader had not withdrawn any amount.
(b) On 13th Jan, 2021 fire occurred in the premises of Mr. X, a cloth merchant. The Goods
were totally destroyed. From the books of account, for the period 01 -04-2020 to the date
of fire the following particulars were available:
Particulars `
Stock as on 01-04-2020 57,000
Purchases 3,05,000
Manufacturing Expenses 60,000
Selling Expenses 24,200
Sales 4,98,000
28 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

At the time of valuing stock as on 31st March, 2020, a sum of ` 7,000 was written off on a
particular item, which was originally purchased for ` 20,000 and was sold during the year
for ` 18,000. Barring the transaction relating to this item, the gross profit earned during the
period was 25% on sales. Mr. X has insured his stock for ` 40,000. Compute the amount
of the claim.
(c) An Engineer purchased a compressing machine on hire purchase system. As per the terms
he is required to pay ` 1,40,000 down, ` 1,06,000 at the end of first year, ` 98,000 at the
end of the second year ` 87,000 at the end of the third year and ` 55,000 at the end of
fourth year. Interest charged @ 12% p.a. You are required to calculate total cash price of
the machine and the interest paid with each installment.
(d) S. Ltd. was incorporated on 30th November 2020 to take over the running Business of
proprietorship firm of Mr. S. The various expenses debited to the profit and loss Account
for the year 2020-21 included:
(i) Directors fees
(ii) Preliminary expenses written off
(iii) Salaries and general expenses
(iv) Statutory Audit fees
(v) Tax Audit fees u/s 44 AB of the Income Tax Act, 1961
(vi) Commission to travelling agents
(vii) Sale promotion expenses
(viii) Advertisement expenses
(ix) Rent expenses
(x) Bad debts
You are required to determine the basis of apportionment of above expenses between pre
incorporation and post incorporation periods.
(e) Following is the extract of the Balance Sheet of K Ltd (listed company) as at 31st March,
2020
Authorized capital: `
3,00,000 Equity shares of ` 10 each 30,00,000
30,00,000
Issued and Subscribed capital:
2,00,000 Equity shares of ` 10 each, 16,00,000
` 8 paid up
 PAPER – 1 : ACCOUNTING 29

Reserves and surplus:

General Reserve 3,60,000
Capital Redemption Reserve 1,20,000
Securities premium (not realised in cash) 75,000
Profit and Loss Account 6,00,000
On 1st April, 2020, the Company has made final call @ ` 2 each on 2,00,000 equity shares.
The call money was received by 25th April, 2020. Thereafter, the company decided to
capitalize its reserves by way of bonus at the rate of one share for every four shares held.
Show necessary entries in the books of the company and prepare the extract of the
Balance Sheet immediately after bonus issue. (4 Parts x 5 Marks = 20 Marks)
Answer
(a) Physical Capital Maintenance at Current Cost
In the given case, the specific price index applicable to the product is 125 (25/20X100).
Current cost of opening stock = (` 1, 20,000 / 100) x 125 Or 6,000 units x ` 25
= ` 1, 50,000
Current cost of closing cash = ` 1, 20,000 (` 1, 80,000 – ` 60,000)
Opening equity at closing current costs = ` 1, 50,000
Closing equity at closing current costs = ` 1, 20,000
Retained Profit = ` 1, 20,000 – ` 1, 50,000 = (-) ` 30,000
The negative retained profit indicates that the trader has failed to maintain his capital. The
available fund of ` 1, 20,000 is not sufficient to buy 6,000 units again at increased price of
` 25 per unit. The drawings should have been restricted to ` 30,000 (` 60,000 – ` 30,000).
If the trader had not withdrawn any amount, then the answer would have been as
below:
Current cost of opening stock = ` 1, 80,000
Opening equity at closing current costs = ` 1, 50,000
Retained Profit = ` 1, 80,000 – ` 1, 50,000 = ` 30,000
If the trader had not withdrawn any amount, then the retained profit would have been
` 30,000.
30 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

(b) Computation of claim for loss of stock

Memorandum Trading Account as on 13.01.2021
Particulars Normal Abnormal Total Particulars Normal Abnormal Total
To Opening Stock 44,000 13,000 57,000 By Sales 4,80,000 18,000 4,98,000
To Purchases 3,05,000 - 3,05,000 By Closing 49,000 - 49,000
Stock
To Manufacturing 60,000 - 60,000
Expenses
To Gross Profit 1,20,000 5,000 1,25,000

Total 5,29,000 18,000 5,47,000 Total 5,29,000 18,000 5,47,000

Insurance policy was for ` 40,000 as such goods are under-insured. The amount of claim
should be restricted to the policy amount, ie. ` 40,000.
(c) Ratio of interest and amount due = Rate of interest = 12
100 + Rate of interest 112
No of instalments Instalment Amount due at the Interest Principal due at
amount time of instalment the beginning
(`) (`) (`) (`)
(1) (2) (3) (4)
4th 55,000 55,000 5,893 49,107
3rd 87,000 1,36,107 14,583 1,21,524
2nd 98,000 2,19,524 23,520 1,96,004
1st 1,06,000 3,02,004 32,358 2,69,646
Total Cash Price = ` 1,40,000 + ` 2,69,646 = ` 4,09,646
(d)
No. Particulars Basis of apportionment
(i) Directors Fees Charge to Post incorporation period
(ii) Preliminary Expenses written off Charge to Post incorporation period
(iii) Salaries and general expenses Time ratio
(iv) Statutory Audit Fees Charge to Post incorporation period
 PAPER – 1 : ACCOUNTING 31

(v) Tax Audit Fees u/s 44 AB of the On the basis of sales /turnover ratio in the
Income Tax Act, 1961 respective periods
(vi) Commission to travel agents On the basis of sales / turnover ratio in the
respective periods
(vii) Sales Promotion expenses On the basis of sales / turnover ratio in the
respective periods
(viii) Advertisement Expenses On the basis of sales / turnover ratio in the
respective periods
(ix) Rent Expenses Time Ratio
(x) Bad Debts On the basis of sales / turnover ratio in the
respective periods

(e) Journal Entries

Date Particulars ` `
1.04.2020 Equity Share Final Call A/c Dr. 4,00,000
To Equity Share Capital A/c 4,00,000
(Being final call of ` 2/- per share on 2,00,000
equity shares due as per Board’s resolution
dated ………..)
25.04.2020 Bank A/c Dr. 4,00,000
To Equity Share Final Call A/c 4,00,000
(Final Call money on 2,00,000 equity shares
received)
Capital Redemption Reserve A/c Dr. 1,20,000
General Reserve A/c Dr. 3,60,000
Profit and Loss A/c Dr. 20,000
To Bonus to shareholders 5,00,000
(Being provision for bonus shares at one share
for every four shares held as per Board’s
resolution dated…………)*
Bonus to shareholders Dr. 5,00,000
To Equity Share Capital A/c 5,00,000
(Being issue of bonus shares)

*Any other logical method for utilization of reserves may be followed as per the Companies
Act, 2013.
32 INTERMEDIATE (NEW) EXAMINATION: JULY, 2021

Extract of Balance Sheet

Authorized Capital `
3,00,000 Equity shares of ` 10/- each 30,00,000
Issued and Subscribed Capital
2,50,000 Equity shares of `10/- each, fully paid 25,00,000
(Out of the above 50,000 Equity shares `10/- each were issued by way
of bonus shares)
Reserves and Surplus
Securities premium (not realized in cash) 75,000
Profit and Loss Account 5,80,000
Note: As per SEBI regulations, securities premium should be realized in cash, whereas
under the Companies Act, 2013 there is no such requirement. In accordance with Section
52, securities premium may arise on account of issue of shares other than by way of cash.
Thus, for unlisted companies, securities premium (not realized in cash) may be used for
issue of bonus shares, whereas the same cannot be used in case of listed companies.