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 par. What amount should be transferred to Capital Redemption Reserve account?

• A. Nil
• B. $Rs.80,000$
• C. $Rs.1,20,000$
• D. $Rs.2,00,000$

Answer 1

Answer: (C)

$Rs.1,20,000$

Redeemable preference shares : $Rs.200000$

Fresh Equity Shares $Rs.80000$

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Balance Amount $Rs.120000$

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An amount of $Rs.120000$ need to be transferred to Capital Redemption Reserve Account.