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Issue of Shares at Premium

4,000 prefere...

Question

4,000 preference shares of Rs. 100 each are due for redemption at par. Company is proposing to issue 10,000 Equity shares of Rs. 10 at par for the purpose of redemption. What amount will be transferred to Capital Redemption Reserve Account out of profits?

A

Rs. 4,00,000

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B

Rs. 3,00,000

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C

Rs. 1,00,000

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D

Rs. 5,00,000

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Solution

The correct option is D Rs. 3,00,000
b'4,000 preference shares of RS,100 each as [4,000 x 100 =4,00,000
10,000 Equity shares of Rs. 10 each as [10,000 x 10 = 1,00,000
capital Redemption Reserve Account 4,00,000 - 1, 00,000 =3,00,000
'

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