Question

What journal entry is passed for transfer to capital redemption reserve account?

• A. General Reserve Dr.Capital Redemption Reserve Account Cr.
• B. Profit & Loss Account Dr.Capital Redemption Reserve Account Cr.
• C. Dividend Equalization fund accoint Dr.Capital Redemption Reserve Account Cr.
• D. All of the above

Answer 1

Answer: (D)

All of the above

Section 69 : Companies Act 2013

1. Where a company purchase its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transfrred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.

2. The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Journal entry passed for transfer to capital redemption reserve account is:

General reserves A/c Dr.

Profit & Loss A/c Dr.

Dividend Equalization Fund A/c Dr.

To Capital Redemption Reserve A/c