Question

A company has 50,000 Redeemable preference Shares of * 10 each fully paid.
The Company decides to redeem the shares on 31st December 2017 at a premium
of 10%. The company has sufficient profits, but in order to augment liquid funds
the following issues are made:
(i) 2000 8% Debentures of 100 each at par.
(ii) 8000 Equity shares of 10 each at a premium of 2 per share.
The issues were fully subscribed and all the amounts were received. The
redemption was duly carried out.
Give Journal Entries.​

Answer 1

Answer:

a. debenture A/C dr 16000

   to subscription a/c 16000

B. equity share a/c  400

  to premium a/c      400

Answer 2

Answer:

10% preference shares of Rs. 100 each

( 2,000 x 100 ) 2,00,000

Less: Equity shares of Rs. 100 each

( 1,500 x 100) 1,50,000

Capital Rdeemption Reserve Account 50,000.

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