Question

eds of Preference Shares,
lustration 8. A company issues 10,000 10% Preference Shares of Rs. 100 each. Cost of issue is
-2 per share. Calculate cost of preference capital if these shares are issued (a) at par, (b) at a premium of 10
and (c) at a discount of 5%.
Solutions​

Answer 1

Answer:

(a) at par

bank a/c 10000×102

to pre. sh. on application 10000×100

to cost of issues 10000× 2

pre. sh. applications 100000×102

to pre. sh. capital 10000×102

(b)at a premium 10

bank a/c 10000×112

to pre. sh. application 10000×100

to cost of issues 10000×2

to security premium reserve 10000×10

pre.sh. application 10000×112

to pre.sh. capital 10000×112

( c) at a discount 5%

bank a/c 950000

pre.sh. for issuing disc. 50000

to pre. sh. application

to pre. c of iss..

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