(When fresh issue of shares is made at a discount)
The Balance Sheet of Ultra Modern Ltd. as at 31st March, 2011 is as follows:
|
Liabilities |
Rs |
Assets |
Rs |
|
Share Capital |
|
Fixed Assets: |
|
|
Issued and Subscribed Capital: |
|
Land and Building |
2,00,000 |
|
1,000, 9% Redeemable |
|
Plant and Machinery |
60,000 |
|
Preference Shares of |
|
Furniture and Fixtures |
9,000 |
|
Rs.100 each |
1,00,000 |
Current Assets: |
|
|
Rs.18,000 Equity Shares of |
|
Stock |
60,000 |
|
Rs.10 each |
1,80,000 |
Debtors |
25,000 |
|
Reserves and Surplus: |
|
Investments |
54,000 |
|
Securities Premium Account |
20,000 |
Bank |
42,000 |
|
General Reserve Account |
60,000 |
|
|
|
Profit and Loss Account |
40,000 |
|
|
|
Current Liabilities: |
|
|
|
|
Sundry Creditors |
50,000 |
|
|
|
|
4,50,000 |
|
4,50,000 |
The Company decided to redeem its preference shares at a premium of 5% on 1st April, 2011.
A fresh issue of 3,000 equity shares of Rs.10 each was made at Rs.9 per share, payable in full on 1st April, 2011. These were fully subscribed and all moneys were duly collected. All the investments were sold for Rs.50,000 to provide cash for redemption of preference shares. The directors wish that only a minimum reduction should be made in the revenue reserves.
You are required to give the journal entries, including those relating to cash to record the above transactions and to draw up the balance sheet as it would appear after redemption of preference shares.