(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.