Question

S Ltd. issued $2,000$, $10\%$ Preference shares of Rs. $100$ each at par, which are redeemable at a premium of $10\%$. For the purpose of redemption, the company issued $1,500$ Equality Shares of Rs. $100$ each at a premium of $20\%$ per share. At the time of redemption of Preference Shares, the amount to be transferred by the company to the Capital Redemption Reserve Account will be________.

• A. Rs. $50,000$
• B. Rs. $40,000$
• C. Rs. $2,00,000$
• D. Rs. $2,20,000$

Answer 1

Answer: (A)

Rs. $50,000$

10% preference shares of Rs. 100 each

( 2,000 x 100 ) 2,00,000

Less: Equity shares of Rs. 100 each

( 1,500 x 100) 1,50,000

Capital Rdeemption Reserve Account 50,000.