Model: Minimum fresh issue of shares at a discount The balance sheet of M/s Laxmi Ltd. as on 31 March 2010 was as follows:
|
Liabilities |
Assets |
||
|
2,0008%Redeemable Preference Shares |
Sundry Assets |
9,00,000 |
|
|
of 100 Each Fully Paid |
2,00,000 |
Cash at Bank |
2,00,000 |
|
4,0006%Redeemable Preference Shares of 50 Each, 25 Per Share Paid up |
1,00,000 |
||
|
40,000 Equity Shares of Rs.10 Each |
4,00,000 |
||
|
Reserves & Surplus: |
|||
|
Capital Reserve |
1,20,000 |
||
|
Securities Premium |
20,000 |
||
|
Dividend Equalization Reserve |
1,10,000 |
||
|
Current Liabilities |
1,50,000 |
||
|
11,00,000 |
11,00,000 |
The company decided to redeem the preference shares at a premium of 5%. To enable the redemption to be carried out, the company decided to issue after carrying out, the necessary formalities required under law, sufficient number of new equity shares at a discount of 10%. You are required to give the necessary journal entries and prepare the balance sheet soon after the redemption