Question

X Ltd. Whose issued share capital on 31 March 2013 consisted of 24,000,10% Preference

shares of Rs.100 each fully paid up and 60,000 Equity share of Rs.100 each, Rs. 90 paid

up, decided to redeem preference shares at a premium of Rs.10 per share .The company’s

balance sheet as on 31-3-2013 showed a general reserve of Rs.28,00,000.The redemption

was effected partly out of the proceeds of a new issue of 12,000 equity shares of Rs.100

each at a premium of Rs.35 per share .The premium payable on the redemption was met

out of the premium received on the new issue ​

Answer 1

) The declaration of bonus at the rate of Rs.10 per share on the equity share for the

purpose of making the said equity share fully paid, and

ii) The issue of bonus shares to old equity shareholders in the ratio of one share for

every five shares held by them

You are required to pass necessary journal entries.