Question

S Ltd. issued 2,000, 10% preference shares of Rs. 100 each at per, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity share of Rs. 100 each at a premium of 20% per share. At the time of redemption of preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =? (a) Rs. 50,000 (b) Rs. 40,000 (c) Rs. 2,00,000 (d) Rs. 2,20,000

Answer 1

debenture redemption reserve is made of 25 % of the nominal face value or debenture which is 2000*100=200000 * 25%=50000