## Comprehensive Problem: KG Limited
### Flow of Transactions
1. Sale of Investment (at profit)
2. Buy back of Equity Shares
3. Issue of Bonus Shares
4. Prepare Balance Sheet and Notes to Accounts
### Step 1 – Sale of Investment
```
Bank A/c Dr 75
To Investments A/c 74
To P&L (Profit) 1
```
### Step 2 – Buy Back of Equity Shares
Opening equity: 1,200L face value (1,200 lakh shares × ₹10? Or ₹ in lakhs?)
Bought back at ₹15/share → 30 lakh shares × ₹15 = ₹450L total
```
Equity Share Capital A/c Dr 300 [30L shares × ₹10 face]
Premium on Buy Back A/c Dr 150 [30L shares × ₹5 premium]
To Equity Shares Bought Back A/c 450
Equity Shares Bought Back A/c Dr 450
To Bank A/c 450
Securities Premium A/c Dr 150
To Premium on Buy Back A/c 150
General Reserve A/c Dr 265
P&L A/c Dr 35
To CRR A/c 300 [face value]
```
### Step 3 – Bonus Shares (1:4 ratio)
Post buy-back equity = 1200 – 300 = 900L face value
Bonus = 900 ÷ 4 = 225L (sourced from CRR)
```
CRR A/c (or Revenue Reserve) Dr 225
To Bonus to Shareholders A/c 225
Bonus to Shareholders A/c Dr 225
To Equity Share Capital A/c 225
```
### Notes to Accounts Reconciliation (₹ lakhs)
Share Capital:
| ₹ lakhs | |
|---|---|
| Opening equity | 1,200 |
| Less: Buy back | (300) |
| Add: Bonus shares | 225 |
| Closing | 1,125 |
Reserves & Surplus:
| Reserve | Opening | Movements | Closing |
|---|---|---|---|
| Securities Premium | 175 | –150 (BB premium) | 25 |
| General Reserve | 265 | –265 (→CRR) | 0 |
| CRR | 200 | +265+35–225 (bonus) | 275 |
| P&L | 170 | –35 (→CRR)+1 (invest gain) | 136 |
| Total R&S | 436 |
Cash & Cash Equivalents:
| ₹ lakhs | |
|---|---|
| Opening | 740 |
| Add: Investment sold | 75 |
| Less: Buy back payment | (450) |
| Closing | 365 |