Question

InCo 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. Show the Journal entries in the books of the

company. ​

Answer 1

Answer:

Cash a/c. dr. ₹ 3,60,000

To Equity share capital a/c. ₹ 3,00,000

To securities premium a/c. ₹ 60,000

Redeemable preference share a/c. ₹ 9,00,000

To cash a/c. ₹ 3,60,000

To General reserve. ₹ 2,50,000

To securities premium a/c. ₹60,000

To Crr. ₹ 2,10,000