The relevant section of the balance sheet of OKAY Ltd. as on 31 March 2011 is as follows:
|
Liabilities |
|
|
Share Capital: |
24,00,000 |
|
Authorized: |
|
|
Issued & Subscribed: |
|
|
1,20,000 Equity Shares of Rs.10 Each, Fully Paid Up} |
12,00,000 |
|
4,500 8% Redeemable Preference Shares of Rs.100 Each, Fully Paid Up} |
4,50,000 |
|
Reserve & Surplus: |
|
|
Profit Prior to Incorporation |
60,000 |
|
Capital Reserve |
22,500 |
|
Securities Premium |
15,000 |
|
General Reserve |
1,20,000 |
|
Profit & Loss A/c |
90,000 |
The pref. shares were due to be redeemed at a premium of 5 %. As the divisible profits were inadequate, the company after completing the legal formalities issued the minimum amount of equity shares of Rs.10 each at a discount of 10%.
All the preference shares were then redeemed. You are required to pass journal entries for all the above transactions.