Page 135 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes 10. The following balances were extracted from the books of Raman Limited as on 31st Dec.,
2005 3,000, 8% redeemable preference shares of 100 each fully called up 3,00,000
Less: Calls in Arrear at 20 per share on 450 shares 9,000
2,91,000
General Reserve 75,000

Capital Reserve 15,000
The preference shares were redeemed on 1st January, 2006 at a premium of 10%. The
company issued such further equity shares of 10 each as were necessary for the purpose
of redeeming the preference shares, which were fully subscribed and duly allotted. You
are required to show the journal entries showing the transactions relating to the redemption
of shares and the relevant extracts on the liabilities side of the balance sheet after such
redemption. (Adapted from B. Com. Mysore)

11. The summarised balance sheet of Sahitya Company Limited on 30th June 2006.
Liabilities ( ) Assets ( )
Share Capital: Sundry Assets 80,00,000
Authorised, Issued and Paid up: Cash Balance 32,00,000
2,00,000; 8% Redeemable Preference Shares of 10 each 20,00,000
5,00,000 Equity Shares of 10 each 50,00,000
Current Liabilities 30,00,000
Profit & Loss A/c 12,00,000
1,12,00,000 1,12,00,000

The condition of issue of redeemable Preference Shares provided to their being redeemed
on 1st July, 2006 at a premium of 5%. The profits available being not sufficient to redeem
the whole issue, the company issued 10,000, 10% preference shares of 100 each at par on
1st July, 2006 which were duly taken up and paid for. The redeemable preference shares
were redeemed on the due date.
Show the journal entries to record the above mentioned transactions.
12. On 31st March, 2006 the summarised balance sheet of Arti Limited stood as follows:

Liabilities ( ) Assets ( )
Share capital: Fixed capital 15,00,000
Authorised, Issued and Subscribed Cash at Bank 5,00,000
12,500 equity shares of 100 each fully paid up 12,50,000 Other Current Assets 7,50,000
6,250, 10% Redeemable Preference shares of 100 6,25,000
each, fully paid up
Reserve & Surplus:
Share premium 25,000
Dividend equalization Reserve 2,55,000
Profit and Loss A/c 95,000
Current Liabilities 5,00,000
27,50,000 27,50,000

The company redeemed all its preference shares at a premium of 10 per cent by issuing the
fresh equity shares of 100 each at a premium of 5% for minimum amount necessary, after
using all its divisible profits for purpose of redemption.

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