Please help

Q/- The following item appear in the balancesheet of deshbandhu limited as on 31 march, 2000

 (i)Share capital:

equity-

Authorised-           5,00,000 shares of10 each

Issued,suscribed, called, and paid up-         4,00,000 shares of Rs10 each

Preference-

authosired,issued,and suscribed-                   60,000, 12%preference shares of20 fully paid

 

(II) Investment-        Rs3,50,000

 (iii) profit and loss A/c (CR bal) -            Rs7,00,000

It has been decided to redeem the preference shares at the prenium of 5% as on 31 march,2000. It was futher decided to:

(A) sell the investment for Rs3,00,000

(B) Finance part of the redemption from company funds, subject to leaving a balance of2,00,000 in the profit and loss account

(C) Issue sufficient number of equity shares at prenium of Rs2 to raise the balance of the funds required .

the above decision have been carried out and the preference shares redeemed. Give the journal entry to record the above transaction

Replies (3)

are there no other reserves reflecting in B/s???????/

Yes You can redeemed the Preference share by managing of funds.


Preference share Capital - 1200,000

Sources of Income (300000+500000) = (800,000)

Then you will required 400,000 for redeemed the Preference share. So you can issued Equity share

bcz you have remaining issued capital (500000-400000).

Originally posted by : Ravi Jhamb

Yes You can redeemed the Preference share by managing of funds.


Preference share Capital - 1200,000

Sources of Income (300000+500000) = (800,000)

Then you will required 400,000 for redeemed the Preference share. So you can issued Equity share

bcz you have remaining issued capital (500000-400000).

 

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