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when fresh issue of shares is made at a discount 674540

(When fresh issue of shares is made at a discount)

The Balance Sheet of Ultra Modern Ltd. as at 31st March, 2011 is as follows:

Liabilities

Rs

Assets

Rs

Share Capital

 

Fixed Assets:

 

Issued and Subscribed Capital:

 

Land and Building

2,00,000

1,000, 9% Redeemable

 

Plant and Machinery

60,000

Preference Shares of

 

Furniture and Fixtures

9,000

Rs.100 each

1,00,000

Current Assets:

 

Rs.18,000 Equity Shares of

 

Stock

60,000

Rs.10 each

1,80,000

Debtors

25,000

Reserves and Surplus:

 

Investments

54,000

Securities Premium Account

20,000

Bank

42,000

General Reserve Account

60,000

 

 

Profit and Loss Account

40,000

 

 

Current Liabilities:

 

 

 

Sundry Creditors

50,000

 

 

 

4,50,000

 

4,50,000

The Company decided to redeem its preference shares at a premium of 5% on 1st April, 2011.

A fresh issue of 3,000 equity shares of Rs.10 each was made at Rs.9 per share, payable in full on 1st April, 2011. These were fully subscribed and all moneys were duly collected. All the investments were sold for Rs.50,000 to provide cash for redemption of preference shares. The directors wish that only a minimum reduction should be made in the revenue reserves.

You are required to give the journal entries, including those relating to cash to record the above transactions and to draw up the balance sheet as it would appear after redemption of preference shares.

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