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Interest on Capital Exceeds Profits

A limited com...

Question

A limited company has to redeem redeemable preference shares of the value of Rs. 1,00,000 for which the company has issued 3,000 equity shares of Rs. 10 each at a premium of 10%. The amount to be transferred to capital redemption reserve account will be ___________.

A

Rs. 1,00,000

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B

Rs. 97,000

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C

Rs. 70,000

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D

Rs. 67,000

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Solution

The correct option is C Rs. 70,000
b'Preference shares 1,00,000
Less-Equity shares 30,000
[3,000 x 10 each]
capital redemption reserve 70,000.
'

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