Question

16. (Where minimum bank balance is required to be maintained and no. of shares to be issued
is to be calculated). Liabilities and Assets of M Ltd. as on 31-3-2014 are given below
Liabilities
assets
9% Redeemable Preference
Sundry Assets
Shares of 100 each,
Investments
2,75.000
fully paid up
6,50,000 Cash at Bank
67,500
Equity Shares of 5 each
fully paid up
2,25,000
General Reserve
1,00,000
Surplus Account
2,60,000
Sundry Creditors
57,500
12,92,500
12.92.500
Preference shares are to be redeemed on 1-4-2014 at a premium of 7%. In order to
2
facilitate redemption the company had decided :
(1) To sell the investments for 2,60,000,
(ii) To finance part of the redemption from company's fund, and
(iii) To issue sufficient equity shares at a premium of? 1 per share to raise the balance of
funds required.
(iv) Minimum bank balance to be retained at 10,500. The investments were sold, the
equity shares were fully subscribed and the shares were duly redeemed
Show the Journal Entries (without narration) and prepare the Balance Sheet.
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Answer 1

Answer:

(Where minimum bank balance is required to be maintained and no. of shares to be issued

is to be calculated). Liabilities and Assets of M Ltd. as on 31-3-2014 are given below

Liabilities

assets

9% Redeemable Preference

Sundry Assets

Shares of 100 each,

Investments

2,75.000

fully paid up

6,50,000 Cash at Bank

67,500

Equity Shares of 5 each

fully paid up

2,25,000

General Reserve

1,00,000

Surplus Account

2,60,000

Sundry Creditors

57,500

12,92,500

12.92.500

Preference shares are to be redeemed on 1-4-2014 at a premium of 7%. In order to

2

facilitate redemption the company had decided :

(1) To sell the investments for 2,60,000,

(ii) To finance part of the redemption from company's fund, and

(iii) To issue sufficient equity shares at a premium of? 1 per share to raise the balance of

funds required.

(iv) Minimum bank balance to be retainl

Info

Explanation:

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