Chartered Accountancy

CPT Course

Session 1, Section A
Fundamentals of Accounting

Lecture 23 Company Accounts Redemption

1

Quick Revision Notes

3
Accounting Entries -Redemption by Fresh
Issue of Shares
Fresh Issue:
Bank A/c
Dr.
To Share Capital A/c
To Securities Premium A/c (Premium if any)
Bank A/c
Discount on issue of Shares A/c
(Discount if any)
To Share Capital A/c

Dr.
Dr.

Redemption at par
Redeemable Preference Share Capital A/c Dr.
To Preference Shareholders A/c
Redemption at Premium
Redeemable Preference Share Capital A/c Dr.
Premium on Redemption of Preference Share Capital
A/c Dr.
To Preference Shareholders A/c
Payment to Preference Shareholders
Preference Shareholders A/c
To Bank A/c

Accounting Entries -Redemption by

Profits
Shares are redeemed at par:
Redeemable Preference Share Capital A/c Dr.
To Preference Shareholders A/c

Adjustment of premium on redemption

Profit & Loss A/c
Dr.
Securities Premium A/c
Dr.
To Premium on Redemption of Preference
Shares A/c

Shares are redeemed at a premium

Redeemable Preference Share Capital A/c Dr.
Premium on Redemption of Preference Share A/c r.
To Preference Shareholders A/c

Transfer to Capital Redemption Reserve Account

General Reserve A/c
Dr.
Profit & Loss A/c
Dr.
To Capital Redemption Reserve A/c

Payment made to preference shareholders

Preference Shareholders A/c
To Bank A/c

Dr.

Dr.

Adjustment of premium on redemption

Profit and Loss A/c
Dr.
Security Premium A/c
Dr.
To Premium on redemption of Preference Share A/c

ICAI