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Redemption Of Pref. Shares

Published in: Accountancy
  • Mahesh S

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This notes helps to students to help them to very grip on the topic about pref. shares redemption.

  • 1
    Redemption of Pre.Shares Means paying back to pref.shareholder on maturity date. Red yrs Red:- At par, At Premium Conditions for Red. Shares must be fully paid up Red. Out of :- a) Proceeds from the Fresh issue of shares Or Liabiliites [email protected] Bank a/c Dr To SC 1) 2) 3) 4) 1) 2) b) Free Reserves c) Com.of Both Or Above Both Create Cap.Redemption Reserve (CRR), if Red.made out of Free Reserve Prem. On Red of shares must be paid out of:- Priorit of utilisation:- a)Sec.Prem a/c b) Cap.Reserve a/c c) Free Reserve a/c My_ Students Note the Points:- CRR=Nom,(Face) Value of Pre.Shares is to be redeemed-Proceeds from Fresh Issue Proceeds from Fresh Issue of shares=No:-of sh.issued*[FV+Premium-Dis)— Calcn of Amt of Fresh Issue Nominal (Face) Value of Pref.shares is to be redeemed-Available Free [Free pft) Free Reserve Gen.Reserve P&L a/c (Cr bal)/Surplus Div Equalisation Fund Res.Fund Ins.Fund Workmen Compensation Fund Accident Compensation Fund Contingency Reserve Res.for Doubtful Debts Res.for Taxation Sinking Fund Invst Fluctuation Reserve
  • 3
    Amt BS Asset Amt Rs8 paid up 80000 20000 b) c) d) Ans:- sc.l sc.2 sc.3 Sc.4 sc.5 sc.l sc.2 sc.3 20000 From the following inf,Cal the amount that should be transferred to CRR a/ PS to be redeemed PS to be redeemed at par at premium of 5% at par at premium of 10% 5% at par Premium 60,000.00 120,000.00 A/c Utilised to pay of Prem.on Red SP/CR/FR SP/CR/FR From the following information, determine the amount of fresh issue of PS to be redeemed at par at premium of 1 (NV of Pref.shares to b e-r*emed) PS to be redeemed sc.l sc.2 sc.3 at premium of 1 120,000.00 120,000.00 A/c Utilised to- pay of Prem.on Red SP/CR/FR SP/CR/FR Utilised Pr-l 80000 40000
  • 4
    400000 20000 SP/CR/FR
  • 5
    c in each of the follow.cases Fresh issue of SC for the purpose of Red at par at par at premium of at Discount of at Discount of Red. Amt can be made Out of:- 5% (B) Fresh issue of SC Dis 100,000.00 50,000.00 (A) Net (Fl-Dis) 900,000.00 950,000.00 Reservess 200,000.00 NA 200,000.00 NA 200,000.00 100,000.00 300,000.00 NA 250,000.00 NA Amt from FIS 400,000.00 240,000.00 270,000.00 T fer to CRR from FR 200,000.00 200,000.00 200,000.00 300,000.00 250,000.00 for the purpose of red.of pref.shares Available Amt of R&S SP a/c GR a/c a/c SP a/c SP a/c a/c GR a/c CR a/c DER a/c Utilised Pr-2 CR 400000 800000 1000000 80000 40000 600000 300000 60000 50000 Utilised Pr-3 FR-P&L a/c-(b/ 40,000.00 FR-P&L a/c 60000 20,000.00 Available Amt in 800000 960,000.00 930,000.00 Available Amt in ESC/Net
  • 6
    400000 40000


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