Question

Redeemable preference shares of $Rs.2,00,000$ are redeemed at par for which purpose fresh equity capital of $Rs.80,000$ is issued at a discount of $10\%$.
What amount should be transferred to Capital Redemption Reserve account?

• A. $Rs.1,20,000$
• B. $Rs.1,28,000$
• C. $Rs.2,00,000$
• D. $Rs.72,000$

Answer 1

Answer: (B)

$Rs.1,28,000$

Redeemable preference shares : $Rs.200000$

Fresh Equity Shares $Rs.80000$

Less: Discount on issue of shares @10% $Rs.8000$

----------------------- $Rs.72000$

----------------------

Balance amount $Rs.128000$

-------------------

An amount of $Rs.128000$ need to be transferred to Capital Redemption Reserve Account.