Model: Forfeiture and re-issue of redeemable preference shares Following is the balance sheet of M/s Thomas Co. Ltd. as on 31 March 2011 in a summarized form:
|
Liabilities |
Assets |
||
|
Share capital: |
Bank |
1,20,000 |
|
|
Paid-Up Share Capital 4,000 Equity |
4,00,000 |
Other Assets |
8,25,000 |
|
Shares of Rs. 100 Each Fully Paid |
|||
|
2,000 8%Redeemable Preference Shares of Rs. 100 Each: 2,00,000 |
|||
|
Less: Calls in Arrears of 100 Shares) |
1,95,000 |
||
|
Reserves & Surplus: |
|||
|
General Reserve |
2,50,000 |
||
|
Development Rebate Reserve |
40,000 |
||
|
Other Liabilities |
60,000 |
||
|
9,45,000 |
9,45,000 |
The redeemable preference shares were redeemed on the following basis:
- Further 1,500 equity shares were issued at a premium of 10%.
- Expenses of fresh issue of shares Rs.4000.
- Out of 100 preference shares, holders of 80 shares paid the call money before the date of redemption. The balance of 20 shares were forfeited and they were re-issued as fully paid shares on receipt ofRs.1,500 before redemption.
- Preference shares were redeemed at a premium of 10% and share premium was utilized in full for this purpose. You are required to pass journal entries and prepare summarized balance sheet after redemption.