Vas Ltd closes its accounts on 31 March each year. Its paid-up share capital consists of:
- 10 lakh 11% Preference shares of Rs.10 each fully paid Rs.1 crore
- 40 lakh Equity shares of Rs.10 each fully paid Rs.4 crore
The profit earned after tax and dividends paid by the company have been given in the following:
|
Year |
Profit Rs.(In Lakhs) |
Rs.Total Dividend Paid (In Lakhs) |
|
2005–06 |
104 |
51 |
|
2006–07 |
96 |
51 |
|
2007–08 |
106 |
59 |
|
2008–09 |
112 |
63 |
|
2009–10 |
120 |
67 |
During 2010–11, the company earned a profit of Rs.108 lakh The Company desires to transfer Rs.50 lakh each to reserves because of a contemplated project. Comment on the proposal. Will your answer differ if the profit earned during 2010-11 was only Rs.90 lakh?