ABC Ltd. has an authorized capital of Rs.40,00,000 comprising 10,000 8% redeemable preference shares of Rs.100 each and 3,00,000 equity shares of Rs.10 each. The preference shares are redeemable on 15 April 2011 at a premium of 10%. The summarized balance sheet of the company as on 31 March 2011 was as follows:
|
Liabilities |
Assets |
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|
Share Capital: |
Sundry assets |
17,50,000 |
|
|
Authorized: |
30,00,000 |
Investment |
2,00,000 |
|
3,00,000 Equity |
Bank |
3,60,000 |
|
|
Shares of Rs. 10 |
|||
|
Each |
|||
|
10,0008% |
|||
|
Redeemable pref. Shares of |
10,00,000 |
||
|
Rs.100 Each |
|||
|
Paid-Up Capital: |
|||
|
1,25,000 Equity |
12,50,000 |
||
|
Shares of Rs. 10 |
|||
|
Each |
|||
|
5,0008% |
5,00,000 |
||
|
Redeemable |
|||
|
Pref. Shares of |
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|
Rs. 100 Each |
|||
|
Capital Reserve |
50,000 |
||
|
General Reserve |
1,50,000 |
||
|
Profit & Loss A/c |
1,60,000 |
||
|
Sundry Creditors |
2,00,00 |
||
|
23,10,000 |
23,10,000 |
The necessary resolutions were duly passed and the following transactions were carried through:
- To provide cash for repayment of redeemable pref. shares, the investments were sold for Rs.2,50,000 and 25,000 equity shares of Rs.10 each were issued to existing shareholders at 20% premium. All moneys were duly received.
- The preference shares were duly redeemed. You are required to pass necessary journal entries in the books of ABC Ltd. and prepare the amended balance sheet.