Question

MKS Ltd. decided to redeem their Preference Shares as on March 31, 2021. Their B/S on that date:
B
Liabilities
Assets
Share Capital
Bank Balance
140,000
0 4,000 Equity shares of Rs. 100 each 400,000 Fixed Assets
560,000
1
fully paid
2 * 1,000 8% Redeemable Preference
3 shares of Rs. 100 each, Rs. 70 paid up 70,000
4 Reserves & Surpluses
5 * Securities Premium
40,000
6 * Capital Reserve
60,000
7 *General Reserve
55,000
8 Current Liabilities
75,000
19
700,000
700,000
The Company redeem the 8% Preference shares at a premium of 5%. To enable the redemption to be carried
1 out, the company decides to issue, after carrying out the necessary formalities required under the law
2 minimum number of new equity shares of Rs. 100 each, at a premium of 10%. The redemption is duly
3 carried out
4 Show Journal entries and the Balancesheet after redemption.
5
6

Answer 1

Answer:

redemption to be carried

1 out, the company decides to issue, after carrying out the necessary formalities required under the law

2 minimum number of new equity shares of Rs. 100 each, at a premium of 10%. The redemption is duly

3 carried out

4 Show Journal entries and the Balancesheet