The following balances appeared in the Books of MCM Ltd. as on 31st December, 2025: Amount (₹) 40,000,10% Preference shares of 100 each, 75 paid up…

Journal Entries In the books of MCM Ltd. Amount (₹) Amount (₹) 10% Preference Share Final Call A/c Dr. 10,00,000 To 10% Preference Share Capital A/c 10,00,000 (Being final call made on preference shares @25 each to make them fully paid up) Bank A/c Dr. 10,00,000 To 10% Preference Share Final Call A/c 10,00,000 (Being receipt of final call money on preference shares) 10% Preference Share Capital A/c Dr. 40,00,000 Premium on Redemption of Preference Shares A/c Dr. 2,00,000 To Preference Shareholders A/c 42,00,000 (Being amount payable to preference shareholders on redemption at 5% premium) Bank A/c Dr. 7,50,000 To Equity Share Application A/c 7,50,000 (Being receipt of application money on 30,000 equity shares @25 per share) Equity Share Application A/c Dr. 7,50,000 To Equity Share Capital A/c 7,50,000 (Being capitalisation of application money received) Equity Share Allotment A/c Dr. 13,50,000 To Equity Share Capital A/c 10,50,000 To Securities Premium A/c 3,00,000 (Being allotment money due on 30,000 equity shares @45 per share including a premium of 10per share) Bank A/c Dr. 13,50,000 To Equity Share Allotment A/c 13,50,000 (Being receipt of allotment money on equity shares) General Reserve A/c (WN - 1) Dr. 22,00,000 To Capital Redemption Reserve A/c 22,00,000 (Being transfer of CRR the amount not covered by the proceeds of fresh issue of equity shares i.e.,40,00,000 -7,50,000 - 10,50,000) Preference Shareholders A/c Dr. 42,00,000 To Bank A/c 42,00,000 (Being amount paid to preference shareholders) General Reserve A/c Dr. 2,00,000 To Premium on Redemption of Preference shares A/c 2,00,000 (Being writing off premium on redemption of preference shares) Notes to Accounts: Particulars ₹ 1 Share Capital: Equity Share Capital Issued, Subscribed & Paid Up: 1,00,000 Equity Shares of 100each fully paid up 1,00,00,000 30,000 Equity Shares of 100each,60 called up & paid up 18,00,000 1,18,00,000 2 Reserves and Surplus: Securities Premium 3,25,000 Add: Amount received @ -10 per share on 30,000 Equity Shares 3,00,000 6,25,000 Capital Redemption Reserve 21,00,000 Add: Transferred on Redemption (WN-1) 22,00,000 43,00,000 General Reserve 42,50,000 Less: Transferred to Capital Redemption Reserve (₹ 22,00,000) Less: Adjustment of Premium payable on Redemption (₹ 2,00,000) 18,50,000 67,75,000 Working Note 1 Amount to be transferred to Capital Redemption Reserve on Redemption: Nominal Value of40,000 Preference Shares Redeemed - 40,00,000 Less: Proceeds of30,000 Equity Shares issued, -60 called up & paid up - 18,00,000 Transfer to Capital Redemption Reserve - 22,00,000 Note: At the time of redemption of preference shares out of accumulated divisible profits, it is necessary to transfer to the Capital Redemption Reserve Account an amount equal to the amount repaid on the redemption of preference shares on account of face value less proceeds of a fresh issue of shares made for the purpose of redemption.