(When Redeemable Preference Shares are redeemed partly out of the profits of the company and partly out of the proceeds of fresh issue of shares made for the purpose).
The Balance Sheet of Producers Ltd. as at 31st March, 2011 is as follows:
Liabilities |
Rs |
Assets |
Rs |
Share Capital: |
Fixed Assets: |
||
Authorized Capital 40,000 Equity Shares of 10 each |
4,00,000 |
Plant and Machinery |
1,90,000 |
1,000 8% Preference Shares of 100 each |
1,00,000 |
Furniture and Fixtures |
20,000 |
5,00,000 |
Investments |
60,000 |
|
Issued and Subscribed Capital: 25,000 Equity Shares of 10 each fully paid up |
2,50,000 |
Current Assets, Loans and Advances: |
|
1,000, 8% Preference Shares of 100 each fully paid up |
1,00,000 |
A. Current Assets: |
|
Reserves and Surplus: |
Stock |
1,30,500 |
|
Securities Premium Account |
9,000 |
Debtors |
49,550 |
Profit and Loss Account |
55,000 |
Cash at Bank |
4,950 |
Current Liabilities and Provisions |
B. Loans and Advances: |
||
A. Current Liabilities : Sundry Creditors |
22,500 |
Prepaid expenses |
1,000 |
B. Provisions: Provisions for taxation |
19,500 |
||
4,56,000 |
4,56,000 |
In order to redeem its preference shares, the company issued 5,000 equity shares of Rs.10 each at a Premium of 10% and sold its investment of Rs.70,800. Preference shares were redeemed at a premium of 10%.
Show the necessary journal entries in the books of the company and prepare the balance sheet of the company immediately after redemption of preference shares.