A company whose paid-up capital includes 5,000 equity shares of Rs.100 each fully paid decides to return Rs.25 per share to the members, this reducing each share to Rs.75 each, fully paid. Pass entries.
|
Date |
Particulars |
L.F. |
Dr. Rs. |
Cr. Rs. |
|
O) |
Equity Share Capital 100) A/c Dr. To Equity Share Capital (Rs.75) A! c To Sundry ShareholdersA/c (Conversion of 5,07 Shares of 17 Each into Shares of75 Each and the Balance to Be Refunded Transferred to the Members) |
5,00,000 |
3,75,000 |
|
|
(ii) |
Sundry Shareholders A/c Dr. To Bank A/c (Refund of Surplus Capital on Account of Reduction of Capital |
1,25,000 |
1,25,000 |
Net result: The share capital of the company will be reduced by the amount refunded. In this problem, the share capital is reduced from Rs.5,00,000 to Rs.3,75,000 because of the refund of Rs.1,25,000 to the shareholders.