Question

when redeemable preference shares are due for redemption the entry passed is​

Answer 1

The correct answer is (B) debit redeemable preference share capital a/c; credit preference shareholders a/c.

Which account is debited when preference shares are due for redemption?

• A company limited by shares is permitted by Section 55(2) of the Act to issue preference shares that are subject to redemption within 20 years of the date of issue.

• The premium on preference share redemption may be deducted from the profit and loss account or the securities premium account.

• Only preference shares that have been completely paid for may be redeemed. Preference shares that have not yet been completely paid cannot be redeemed.

The complete question is ''When Redeemable Preference shares are due for redemption, the entry passed is''

A. debit redeemable preference share capital a/c; credit cash a/c

B. debit redeemable preference share capital a/c; credit preference shareholders a/c

C. debit preference shareholders a/c; credit cash a/c

D. debit preference shareholders a/c; credit capital reduction a/c.

#SPJ2