The extract of Balance Sheet of Hari Om Ltd. as on 31st March, 2024 is as follows Sr. No. Particulars Notes Particulars ₹ I] EQUITY AND LIABILITIES…

CA Foundation · Accounting · RTP · May 2025
The extract of Balance Sheet of Hari Om Ltd. as on 31st March, 2024 is as follows Sr. No. Particulars Notes Particulars ₹ I] EQUITY AND LIABILITIES (1) Shareholders' funds a) Share Capital 1 350,000 b) Reserve & Surplus 2 64,000 II] ASSETS (1) Non-current assets a) PPE & Intangible Assets i) PPE 2,25,000 b) Non-Current Investments 60,000 Notes to accounts: Sr. No. Particulars ₹ 1. Share capital Authorized Share Capital 40,000 Equity shares of 10 each fully paid up 4,00,000 1,000 8% Preference shares of 100 each fully paid up 1,00,000 5,00,000 Issued, Subscribed Called Up and Paid up Share Capital 1000,8% Preference shares of 100 each fully paid up 1,00,000 25,000 Equity shares of 10 each fully paid up 2,50,000 Total 3,50,000 2. Reserve and Surplus Securities Premium Reserves 9,000 Profit and Loss Account 55,000 Total 64,000 In order to redeem its preference shares, the company issued - 5,000 equity shares of 10 each at a premium of 10% and sold its investment of 70,800. Preference shares were redeemed at a premium of 10%. Show the necessary journal entries in the books of the company .

Suggested Answer and Working Notes:

In the books of Hari Om Ltd. Journal Entries Particulars Cr. (₹) Cr. (₹) Bank A/c Dr. 55,000 To Equity Share Application and Allotment A/c 55,000 (Being Application money received) Equity Share Application A/c Dr. 55,000 To Equity Share Capital A/c 50,000 To Securities Premium A/c 5,000 (Being capitalization of equity share application money received) Bank A/c Dr. 70,800 To Investments A/c 60,000 To Profit on sale of investments A/c 10,800 (Being Investments Sold) 8% Redeemable Preference Share Capital A/c Dr. 1,00,000 Premium on Redemption of Preference Shares A/c 10,000 To 8% Preference Shareholders A/c 1,10,000 (Being amount payable to preference share holders on redemption of10% premium) Preference Shareholders A/c Dr. 1,10,000 To Bank A/c 1,10,000 (Being amount paid to Preference Shareholders) Profit & Loss A/c Dr. 10,000 To Premium on Redemption of Preference Share A/c 10,000 (Being Premium on Redemption of preference shares written off out of profit) Profit and Loss A/c Dr. 50,000 To Capital Redemption Reserve A/c (W.N.) 50,000 (Being amount transferred to Capital Redemption Reserve) Working Note: Amount to be transferred to Capital Redemption Reserve Account Face value of shares to be redeemed 1,00,000 Less: Proceeds from new issue ₹ (50, 000) Total Balance 50,000

Topics: Redemption of Preference Share

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