the premium on redemption is to be met from the year rsquo s profit and loss appropr 616964

Model: Redemption at a premium—Partly out of profits and partly out of fresh issue of shares at par Srinivas Ltd. have part of their share capital in 4,000 10% redeemable preference shares of Rs.100 each. The Company decided to redeem the preference shares at premium of 10%. The general reserve of the company stood at Rs.5,00,000. The directors decided to utilize 50% of the reserve in redeeming the preference shares and the balance is to be met from the proceeds of fresh issue of sufficient number of equity shares of Rs.10 each. The premium on redemption is to be met from the year’s profit and loss appropriation account. Give journal entries to record the above transactions.