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 Equity Shares of Rs. 100 each at a premium of 10%. 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. 45,000
• C. Rs. 35,000
• D. Rs. 60,000

Answer 1

Answer: (A)

Rs. 50,000

2,000, 10% preference shares of Rs. 100 each [2,000 x 100 = 2,00,000]

1,500 equity shares of Rs. 100 each [ 1,500 x 100 = 1,50,000]

Capital Redemption Reserve Account 2,00,000 - 1,50,000 = 50,000.