Preference Redemption Problems

A Ltd. wishes to redeem its preference shares amounting to Rs.
1,00,000 at a premium of 5% and for this purpose issues

5,000 equity shares of Rs.10 each at a premium of 5%. The company has also a balance of Rs.1,00,000 in P&L a/c and
Rs.50,000 in General Reserve. Journalize the above transactions
Amount Required Fresh Issue Redemption Premium Settlement . CRR
Preference Capital 100,000 Equity Capital 50,000 Premium on Redemption 5,000 Amt reqd (PSC) 100,000
(+) Redemption (5000 X10) (-) Securities Premium 2,500 (-) Eq Capital (Fresh Issue) 50,000
5,000
Premium
(+) Securities 2,500 To be set off from General 2,500 CRR 50,000
(100,000x5%)
Premium Reserve
105,000 (50,000 X 5%) General Reserve
TOTAL
TOTAL 52,500 (50,000-2,500) 47,500
P&L a/c (50,000-47,500) 2,500
50,000 equity shares Gen reserve 47,500

(50,000-2,500)
1,00,000
Preference capital
Amount to be 50,000 CRR P&L A/c (b/f)
Redeemed (50,000-47,500)
2,500 securities Premium
5,000
Redemption premium
2,500 (b/f) General Reserve
1,00,000 50,000 equity shares
Gen reserve 47,500
Amount to be Preference capital (50,000-2,500)
Redeemed 50,000 CRR
5,000
2,500 securities P&L A/c (b/f)
Redemption
Premium (50,000-47,500)
premium
2,500 (b/f)
General Reserve
PARTICULARS LF DEBIT CREDIT

1 BANK A/C Dr 52,500
To Equity Share Capital a/c 50,000
To Securities Premium A/c 2,500
(Being 5,000 equity shares issued atPremium of 5%)
2 Securities Premium A/c Dr 2,500
General Reserve A/c Dr 2,500
To Premium on Redemption of Preference shares 5,000
(Being premium on redemption provided out of available security
premium
on a/c and balance from General Reserve a/c)
1,00,000 50,000 equity shares
Gen reserve 47,500
Amount to be Preference capital (50,000-2,500)
Redeemed 50,000 CRR
5,000
2,500 securities P&L A/c (b/f)
Redemption
Premium (50,000-47,500)
premium
2,500 (b/f)
General Reserve
3 General Reserve A/c Dr 47,500

Profit & Loss a/c Dr 2,500
To Capital Redemption Reserve a/c 50,000
(Being Pref. shares redeemed not covered by fresh issue, provided out of
General Reserve and P&L a/c transferred to CRR a/c)
4 Preference Share Capital A/c Dr 100,000
Prem on Redemption of Preference Shares a/c Dr
5,000
To Preference Shareholders a/c 105,000
(Being transfer of capital and premium to redeemable Pref. shareholders’ a/c)
5 Preference Shareholders A/c Dr 105,000
To Bank a/c
105,000
(Being Preference Shareholders are paid off)
Inchar Co Ltd. had issued 50,000 redeemable preference shares of Rs.10 each, Rs.8 paid. In order to redeem these shares,
now being redeemable, the company issued for cash 30,000 equity shares of Rs.10 each at a premium of Rs.2 per share.
Out of the cash proceeds, the redeemable preference shares were paid and the balance was met out of the Reserve Fund
which stood at Rs.2,50,000. Pass journal entries in the books of the company. Journalize the above transactions

Amount Required Fresh Issue CRR
Preference Capital 5,00,000 Equity Capital 3,00,000 Amt reqd (PSC) 5,00,000
(50,000 x10) (30,000 X10) (-) Eq Capital (Fresh Issue) 3,00,000
(+) Redemption Nil (+) Securities 60,000 To be set off from Reserve Fund 2,00,000
Premium Premium
(30,000 x 2)
TOTAL 5,00,000 TOTAL 3,60,000
3,00,000 equity shares

5,00,000
Preference capital
Amount to be 2,00,000 CRR Reserve fund a/c
Redeemed
nil
Redemption premium
5,00,000
Preference capital
Redeemed
nil
Redemption premium

1 Redeemable Pref share final call a/c Dr 1,00,000
To Redeemable Pref share capital a/c 1,00,000
(Being share final call was made on 50,000 preference shares at
₹2 per share)
2 Bank a/c Dr 1,00,000
To Redeemable Pref share final call a/c 1,00,000
(Being final call money received on 50,000 Redeemable Preference Shares)
5,00,000
Preference capital
Redeemed
nil
Redemption premium

3 BANK A/C Dr 3,60,000
To Equity Share Capital a/c 3,00,000
(Being 30,000 equity shares issued at premium of ₹ 2/share)
4 Reserve Fund a/c Dr 2,00,000
To Capital Redemption Reserve a/c 2,00,000
(Being pref. shares redeemed not covered by fresh issue, provided out of
Reserve Fund transferred to CRR a/c)
5,00,000
Preference capital
Redeemed
nil
Redemption premium

5 Preference Share Capital A/c Dr 5,00,000
To Preference Shareholders a/c 5,00,000
(Being transfer of capital and premium to redeemable pref.
shareholders’ a/c)
6 Preference Shareholders A/c Dr 5,00,000
To Bank a/c 5,00,000
AR company has 4,000 6% redeemable preference shares of Rs.100 each fully paid. The company decides to redeem the
shares on December 31,2007 at a premium of 5%. The company makes the following issues.
(a) 1,000 equity shares of Rs.100 each at a premium of 10%
(b) 1,000 6% debentures of Rs.100 each
The issue was fully subscribed and all the amounts were received. The redemption was duly carried out. The company has
sufficient profits. Give the journal entries for recording above transactions. Journalize the above transactions


4,00,000
Preference capital
3,00,000 CRR Profit and loss a/c
Amount to be
Redeemed
10,000
20,000
securities Premium
Redemption premium
10,000 (b/f) P&L a/c

4,00,000
Preference capital
Amount to be
Redeemed 10,000 Securities Premium
20,000
Redemption premium 10,000 (b/f) P&L a/c

1 BANK A/C Dr 1,10,000
(Being 1,000 equity shares issued at premium of 10%)
2 BANK A/C (1000 x100) Dr 1,00,000
To 6% Debentures A/c 1,00,000
(Being issue of 6% debentures of Rs.100 each at par)
4,00,000
Preference capital
Amount to be
20,000

(Being premium on redemption provided out of available
security premium a/c and balance from P&L a/c)
4 Profit and Loss a/c Dr 3,00,000
Reserve Fund transferred to CRR a/c)
4,00,000
Preference capital
Amount to be
20,000

Prem on Redemption of Preference Shares a/c Dr 20,000
The following is the balance sheet of a limited company as on 31-3-2019
Liabilities Rs. Assets Rs.
6% redeemable preference shares: Sundry assets 3,10,000
1,000 shares of Rs.100 each 1,00,000 Cash at bank 1,40,000
Equity shares:
20,000 equity shares of Rs.10 each
Sundry creditors
Profit and loss a/c 2,00,000
30,000
1,20,000
Total 4,50,000 total 4,50,000

The company resolved to redeem its preference share capital at a premium of 2% out of profits.
Pass the necessary journal entries and show the company’s balance sheet after the completion of the redemption.
1,00,000
Preference capital 1,00,000 CRR Profit and loss a/c
Amount to be
Redeemed
2,000
Redemption premium 2,000 P&L a/c
1,00,000 Profit and loss a/c
1,00,000 CRR
Amount to be Preference capital
Redeemed 2,000
Redemption premium 2,000 P&L a/c

1 Profit & Loss a/c 2,000
Dr 2,000
To Premium on Redemption of Preference shares
(Being premium on redemption provided out of P&L a/c)
2 Profit and Loss a/c Dr 1,00,000
(Being pref. shares to be redeemed provided out of Reserve Fund
transferred to CRR a/c)
Liabilities Rs. Assets Rs. Balance sheet as on 31-03-2019
6% redeemable Sundry assets 3,10,000 Particulars Note No. Amount
preference shares: 1,00,000 Cash at bank 1,40,000
1,000 shares of Rs.100 I Equity and Liabilities
each 1. Shareholders’ funds
Equity shares:
20,000 equity shares of 2,00,000 a. Share Capital- Equity share capital 2,00,000
Rs.10 each 30,000 b. Reserves and surplus
Sundry creditors 1,20,000 Capital Redemption Reserve 1,00,000
Profit and loss a/c
Total 4,50,000 total 4,50,000 Profit and Loss a/c (1,20,000-2000-1,00,000) 18,000
2. Non-Current Liabilities
3. Current Liabilities
P & L a/c Dr a. Short term borrowings
To Premium on Redemption of b. Trade Payables - Sundry Creditors 30,000
c. Other current liabilities
Preference shares d. Short term provisions
Profit & Loss a/c Dr
To Capital Redemption Reserve 2,000 TOTAL 3,48,000

Preference Share Capital A/c Dr
Prem on Redemption of 2,000 II Assets
Preference Shares a/c Dr 1,00,000 1. Non Current Assets
1,00,000 A. Fixed Assets
100,000 i. Tangible assets - Sundry assets
B. Non-current Investments
2,000
2. Current Assets
102,000
102,000 i. Inventories
Cash
Preference at bank closing
Shareholders A/cbalance
Dr
To Bank a/c
Opg balance 1,40,000
102,000 ii. Trade Receivables
iii. Cash and cash equivalent- Cash at bank 38,000
(-) redemption 1,02,000
iv. Short term loans & advances
Balance 38,000 v. Other current assets
TOTAL 3,48,000
6. The balance sheet of Samson Ltd. as at 31-03-2017 is as follows
Share capital Fixed assets
1500 preference shares of Rs.100 each fully paid 1,50,000 Land and building 3,00,000
27000 equity shares of Rs.10 each 2,70,000 Plant 90,000
Reserve and Surplus Furniture 6,000
Share premium 30,000 Investments 84,000
General reserve 60,000 Current assets
P & L a/c 75,000 Stock 90,000
Current liabilities 90,000 Debtors 45,000
Bank 60,000
Total 6,75,000 total 6,75,000

The company decided to redeem its preference shares at a premium of 5% on 30-4-2017. A fresh issue of equity shares to the
extent required was made and shares were of the denomination of Rs.10 each having a premium of 20%. All the investments were
sold at Rs.81,000. The directors wish that the P & L a/c be fully utilized and Rs.10,000 be left in General Reserve a/c. Show the
journal entries and draw the balance sheet as it would appear after the redemption of preference shares.
Investment P&L a/c balance for CRR Gen. reserve balance for CRR Total amt available for CRR Equity shares to be issued
Cost: 84,000 Opg bal 75,000 Opg bal 60,000 P&L 72.000 Pref capital 1,50,000
(-)sold 81,000 (-)loss on sale 3,000 (-)to be kept 10,000 Gen Res 50,000 (-) CRR 1,22,000
Loss on sale 3,000 Available 72,000 Available 50,000 CRR 1,22,00 Eq. CAPITAL 28,000
(P&L)
6. The balance sheet of Samson Ltd. as at 31-03-2017 is as follows
Share capital Fixed assets
1500 preference shares of Rs.100 each fully paid 1,50,000 Land and building 3,00,000
27000 equity shares of Rs.10 each 2,70,000 Plant 90,000
Reserve and Surplus Furniture 6,000
Share premium 30,000 Investments 84,000
General reserve 60,000 Current assets
P & L a/c 75,000 Stock 90,000
Current liabilities 90,000 Debtors 45,000
Bank 60,000
Total 6,75,000 total 6,75,000
Investment P&L a/c balance for CRR Gen. reserve balance for CRR Total amt available for CRR Equity shares to be issued
Cost: 84,000 Opg bal 75,000 Opg bal 60,000 P&L 72.000 Pref capital 1,50,000
(-)sold 81,000 (-)loss on sale 3,000 (-)to be kept 10,000 Gen Res 50,000 (-) CRR 1,22,000
Loss on sale 3,000 Available 72,000 Available 50,000 CRR 1,22,00 Eq. CAPITAL 28,000
(P&L)
1,22,000 CRR 72,000 Profit and loss a/c
1,50,000
Preference capital
Amount to be 28,000 50,000 General Reserve
Redeemed Equity Capital (b/f)
7,500 (150,000 X 5%)
Redemption premium 7,500 Securities Premium
1,50,000 1,22,000 CRR 72,000 Profit and loss a/c
Redeemed 28,000
50,000 General Reserve
7,500 (150,000 X 5%) Equity Capital

1 BANK A/C Dr 33,600
(Being 2,800 equity shares issued at premium of 20%)
premium a/c)
3 Bank a/c Dr 81,000
To Investments a/c 84,000
(Being investments sold and loss on sale is transferred to P&L a/c)
4 Profit & Loss a/c Dr 72,000
General Reserve a/c Dr 50,000
P&L a/c & general reserve transferred to CRR a/c)
1,50,000 1,22,000 CRR 72,000 Profit and loss a/c
Redeemed 28,000
50,000 General Reserve
7,500 (150,000 X 5%) Equity Capital

Liabilities Rs. Assets Rs. Balance sheet as on 31-03-2019
Share capital Fixed assets Particulars Note No. Amount
1500 preference shares of Land and building 3,00,000
Rs.100 each fully paid 1,50,000 Plant 90,000 I Equity and Liabilities
27000 equity shares of Rs.10 2,70,000 Furniture 6,000
each Investments 84,000 1. Shareholders’ funds
Reserve and Surplus Current assets
Share premium 30,000 Stock 90,000 a. Share Capital Equity
- share capital(270,000+28,000) 2,98,000
General reserve 60,000 Debtors 45,000 b. Reserves and surplus
P & L a/c 75,000 Bank 60,000
Current liabilities 90,000 Share Premium (30,000+5,600-7,500) 28,,100
Capital Redemption Reserve 122,000
Total 6,75,000 total 6,75,000 General Reserve (60,000-50,000) 10,000
PARTICULARS LF DEBIT ₹ CREDIT ₹ 2. Non- Current Liabilities
BANK A/C Dr
To Equity Share Capital a/c
33,600
28,000 3. Current Liabilities 90,000
TOTAL 5,48,100
Securities Premium A/c Dr 7,500
To Premium on Redemption of Preference shares 7,500 II Assets
1. Non Current Assets
Bank a/c Dr
81,000
P&L a/c Dr
3,000 84,000 A. Fixed Assets
To Investments a/c
Tangible assets Land- 3,00,000
72,000 Plant – 90,000
General Reserve a/c Dr 22,000 Furniture- 6,000 3,96,000
To Capital Redemption Reserve a/c

B. Non current Investments
Preference Share Capital A/c 2. Current Assets
Dr 150,000
7,500 90,000
Prem on Redemption of preference Shares a/c Dr 157,500 i. Inventories
ii. Trade Receivables Debtors

Preference Shareholders A/c Dr

1,57,500 iii. Cash and cash equivalent Cash at bank 17,100
iv. Short term loans & advances
Bank: v. Other current assets
60,000+ 33,600 + 81,000 – 157,500 = 17,100 TOTAL 5,48,100
The following is the summarized balance sheet of Peppercorn ltd. as on 31-3-2017
Share capital: Authorized Issued Fixed assets 2,00,000
8% redeemable Current assets 1,20,000 The preference shares were redeemed at a
preference shares of 1,36,000 56,000
Rs.100 each premium of 10%. No trace could be found of
Equity shares of Rs.10 2,04,000 1,68,000 the holders of 12 preference shares. Pass the
each fully paid
3,40,000 2,24,000 journal entries in the books of the company
Securities premium 7,000 and the balance sheet
P&L a/c 61,000
Creditors 28,000
Total 3,20,000 Total 3,20,000
AMT REQUIRED: No Trace: Amt to be settled at the end

Pref cap: 56,000 Pref cap: 12 x100 1,200 Amt Reqd 61,600
(+) Redemptn Prem 5,600 (+) Redem Prem 120 (-) no trace 1,320
Total 61,600 Total 1,320 Net amt 60,280
56,000 56,000 CRR Profit and loss a/c

Preference capital
Amount to be
Redeemed
5,600(56,000 x 10%)
Redemption premium
Securities Premium
56,000 56,000 CRR Profit and loss a/c
Preference capital
Amount to be
Redeemed
5,600(56,000 x 10%)
Redemption premium
Securities Premium

premium a/c)
Dr 56,000
2 Profit & Loss a/c
(Being pref. shares redeemed not covered by fresh issue, provided out
of P&L a/c transferred to CRR a/c)
3 Preference Share Capital A/c Dr 56,000
Dr 60,280
4 Preference Shareholders A/c
To Bank a/c 60,280
Share capital: Issued Fixed assets 2,00,000
Balance sheet as on 31-03-2017
Particulars Note No. Amount
8% redeemable preference Current assets 1,20,000
shares of Rs.100 each 56,000 I Equity and Liabilities
Equity shares of Rs.10 each
fully paid 1,68,000 1. Shareholders’ funds

Securities premium 2,24,000 a. Share Capital Equity
- share capital) 168,000
P&L a/c 7,000
Creditors 61,000 8% redeemable preference shares 1,200
28,000
b. Reserves and surplus
Total 3,20,000 Total 3,20,000 Share Premium (7,000-5,600) 1,400
PARTICULARS
L
DEBIT ₹
CREDIT
P&L a/c(61,000-56000) 5,000
F ₹
Securities Premium A/c Dr 2. Non- Current Liabilities
1 3. Current Liabilities Creditors
To Premium on Redemption of 5,600 5,600 28,000
Premium on Redemption of Pref Shares
Preference shares
120
Profit & Loss a/c Dr
2 TOTAL 2,59,720
56,000

To Capital Redemption Reserve a/c
II Assets
56,000
1. Non Current Assets
Preference Share Capital A/c Dr A. Fixed Assets 2,00,000
3 56,000
Prem on Redemption of B. Non current Investments
5,600
Preference Shares a/c Dr 2. Current Assets 59,720
61,600
To Preference Shareholders a/c
4 Preference Shareholders A/c Dr 60,280 TOTAL 2,59,720

To Bank a/c 60,280

Current Asset
1,20,000- 60,280=59,720
The balance sheet of Zen ltd. as at 31-03-2018 is as follows. Pass journal entries and prepare balance sheet
Liabilities Rs. Assets Rs. The company decided to redeem its preference shares at a premium of
Share capital:Issued and Fixed Assets 5% on 30-4-2018.
fully paid up: L&B 3,30,000 A fresh issue was made of 1000 equity shares of Rs.10 each was made
600 redeemable pref. Plant 2,00,000
shares of Rs.100 each 60,000 Furniture 12,000 5,42,000 at Rs.12 per share payable in full on 30-4-2018.
29,000 equity shares of Current assets These were fully subscribed and all the moneys were duly collected.
Rs.10 each 2,90,000 Stock 30,000 . All the investments were sold realizing Rs.27,000.
Reserves and surplus Debtors 15,000 No trace could be found of the holders of 15 preference shares The
Securities premium 10,000 Investments 28,000 directors wish that only a minimum reduction should be made in the
General reserve 20,000 Bank 20,000 93,000
P&L a/c 2,25,000 revenue reserves.
Current liabilities 30,000 Make a bonus issue to equity shareholders of one Rs.10 per share for
Total 6,35,000 6,35,000 every two Rs.10 shares held in order to capitalize part of the
undistributed profits.
It arranged the bank overdraft to the extent necessary. The
redemption was duly carried out
AMT REQUIRED: No Trace: Amt to be settled at the end EQ. CAPITAL

Pref cap: 60,000 Pref cap: 15 x100 1,500 Amt Reqd 63,000 EQ.cap:1000 x 10 10,000
(+) Redemptn Prem 3,000 (+) Redem Prem 75 (-) no trace 1,575 (+)sec Prem 2,000
Total 63,000 Total 1,575 Net amt 61,425 Total amt 12,000
Investment 60,000 50,000 CRR Profit and loss a/c

Cost 28,000 Preference capital
(-)sold 27,000 Amount to be
Redeemed
10,000 ESC
Loss (p&L) 1,000
3,000
Redemption premium Securities Premium
The balance sheet of Zen ltd. as at 31-03-2018 is as follows. Pass journal entries and prepare balance sheet
Liabilities Rs. Assets Rs. The company decided to redeem its preference shares at a premium of
Share capital:Issued and Fixed Assets 5% on 30-4-2018.
fully paid up: L&B 3,30,000 A fresh issue was made of 1000 equity shares of Rs.10 each was made
600 redeemable pref. Plant 2,00,000
shares of Rs.100 each 60,000 Furniture 12,000 5,42,000 at Rs.12 per share payable in full on 30-4-2018.
29,000 equity shares of Current assets These were fully subscribed and all the moneys were duly collected.
Rs.10 each 2,90,000 Stock 30,000 . All the investments were sold realizing Rs.27,000.
Reserves and surplus Debtors 15,000 No trace could be found of the holders of 15 preference shares The
Securities premium 10,000 Investments 28,000 directors wish that only a minimum reduction should be made in the
P&L a/c 2,25,000 revenue reserves.
Current liabilities 30,000 Make a bonus issue to equity shareholders of one Rs.10 per share for
Total 6,35,000 6,35,000 every two Rs.10 shares held in order to capitalize part of the
undistributed profits.
It arranged the bank overdraft to the extent necessary. The
redemption was duly carried out
BONUS ISSUE Overdraft calculation

Total eq shares
29000 +1,000 30,000 Opening bank balance 20,000
Add: sale of investment 27,000
BONUS: 1 For every 2 existing equity share Add: issue of equity shares 12,000
existing bonus Amount available for redemption 59,000
2 1
30,000 ? 30,000 x ½ =15,000 bonus shares
Value of bonus shares= 15,000 x 10=1,50,000 Amount required 63,000
(-)amt available 59,000
OVERDRAFT AMOUNT 4,000
EQ. CAPITAL BANK A/C Dr. 12,000
EQ.cap:1000 x 10 10,000
(+)sec Prem 2,000
Total amt 12,000
BANK A/C Dr. 27,000
Investment Cost 28,000 P&L A/C Dr. 1,000
(-)sold 27,000 To Investments a/c 28,000
Loss (p&L) 1,000
Securities Premium A/c Dr 3,000
Redemption Prem
60,000x5%=3,000(Securities Prem) To Premium on Redemption of Preference shares 3,000
CRR-50,000 P&L A/C Dr. 50,000

(SET OFF FROM P&L) To Capital Redemption Reserve A/c 50,000
BANK A/C Dr. 4,000
BANK O/D 4,000
To Bank Overdraft A/c 4,000
Pref cap 60,000 Preference Share Capital A/c Dr. 60,000

(+)red prem 3,000 Premium on Redemption of Preference shares Dr 3,000
PSH 63,000
Amt to be settled at the end Preference Shareholders a/c Dr. 61,425
Amt Reqd 63,000 To BANK A/C 61,425
(-) no trace 1,575
Net amt 61,425
Bonus-value Profit and Loss a/c Dr. 1,50,000
Rs.1,50,000 1,50,000
amount to be To Bonus to Shareholders a/c
transferred from (Being bonus declared at Rs. 10 for every
P&L a/c 2 equity shares.)
Bonus to Shareholders a/c Dr 1,50,000

Issue of Bonus shares
(Being Bonus shares issued to equity shareholders)
Share capital:Issued and Fixed Assets
Balance sheet as on 31-03-2017
Particulars Note No. Amount
fully paid up: L&B 3,30,000
600 redeemable pref. shares Plant 2,00,000 I Equity and Liabilities
of Rs.100 each 60,000 Furniture 12,000 5,42,000
29,000 equity shares of Current assets 1. Shareholders’ funds
Rs.10 each 2,90,000 Stock 30,000 . a. Share Capital Equity share capital 4,50,000
Reserves and surplus Debtors 15,000
Securities premium 10,000 Investments 28,000 Redeemable preference shares 1,500
P&L a/c 2,25,000 b. Reserves and surplus
Current liabilities 30,000 Share Premium (10,000+2000-3000) 9,000
Total 6,35,000 6,35,000 General Reserve 20,000
P&L a/c(225,000-1000-50,000-150,000) 24,000
EQ. CAPITAL P&L a/c 2. Non- Current Liabilities
Exiting: 2,90,000 Existing: 2,25,000
3. Current Liabilities 30,000
(+) Fresh Issue 10,000 (-) Loss on sale 1,000
Bank Overdraft 4,000
(+) Bonus issue 1,50,000 (-) CRR 50,000
Total 4,50,000 (-) Bonus Issue 1,50,000 Premium on Redemption of Pref Shares 75
Total 24,000 TOTAL 5,98,575
II Assets
Bank 1. Non Current Assets
Existing: 20,000 Fixed Assets Land and buildings 3,30,000
(+) Sale of Inv 27,000 2,00,000
Plant
(+) Fresh Issue 12,000 12,000
Furniture
(+) Bank o/d 4,000 Non- current Investments
Total 63,000 2. Current AssetsStock 30,000
(-)Redemption 61,425 Debtors 15,000
Closing balance 1,575 Bank (20,000+27,000+12,000+4000-61,425 ) 1,575
TOTAL 5,98,575

Preference Redemption Problems

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Preference Redemption Problems

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A Ltd. wishes to redeem its preference shares amounting to Rs.

1,00,000 at a premium of 5% and for this purpose issues

50,000 equity shares Gen reserve 47,500

PARTICULARS LF DEBIT CREDIT

3 General Reserve A/c Dr 47,500

3,00,000 equity shares

PARTICULARS LF DEBIT CREDIT

PARTICULARS LF DEBIT CREDIT

PARTICULARS LF DEBIT CREDIT

1,00,000 equity shares

10,000 (b/f) P&L a/c

PARTICULARS LF DEBIT CREDIT

PARTICULARS LF DEBIT CREDIT

PARTICULARS LF DEBIT CREDIT

Total 4,50,000 total 4,50,000

PARTICULARS LF DEBIT CREDIT

Total 6,75,000 total 6,75,000

Total 6,75,000 total 6,75,000

PARTICULARS LF DEBIT CREDIT

PARTICULARS LF DEBIT CREDIT

Total 3,20,000 Total 3,20,000

AMT REQUIRED: No Trace: Amt to be settled at the end

56,000 56,000 CRR Profit and loss a/c

1 Securities Premium A/c Dr 5,600

AMT REQUIRED: No Trace: Amt to be settled at the end EQ. CAPITAL

Investment 60,000 50,000 CRR Profit and loss a/c

BONUS ISSUE Overdraft calculation

CRR-50,000 P&L A/C Dr. 50,000

Pref cap 60,000 Preference Share Capital A/c Dr. 60,000

Bonus to Shareholders a/c Dr 1,50,000

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