Alpha Limited has an authorized Equity Share Capital of 20 lakhs divided into equity shares of 100 each and 10% Redeemable Cumulative Preference…

In the books of Alpha Limited Journal Entries Particulars Dr. (₹) Cr. (₹) 1.10% Redeemable Preference Share Capital A/c Dr. 3,00,000 Premium on Redemption of Preference Shares A/c Dr. 30,000 To Preference Shareholders A/c 3,30,000 (Being the amount payable on redemption of3000,10% Redeemable Preference Shares transferred to Shareholders Account) 2. Profit & Loss A/c Dr. 30,000 To Premium on Redemption of Preference Shares A/c 30,000 (Being premium on redemption of preference shares adjusted against to Profit & Loss Account) 3. Bank A/c 1,65,000 To Equity Share application A/c 1,65,000 (Being amount received on issue of equity share) 4. Equity Share Application A/c Dr. 1,65,000 To Equity Shares Capital A/c 1,50,000 To Securities Premium A/c 15,000 (Being the issue of1,500 Equity Shares of 100each at a premium of10%) 5. General Reserve A/c (W.N - 1) Dr. 1,50,000 To Capital Redemption Reserve A/c 1,50,000 (Being the amount transferred to Capital Redemption Reserve A/c as per the requirement of the Act.) 6. Bank A/c Dr. 44,000 Profit and Loss A/c Dr. 1,000 To Investment 45,000 (Being investment sold at 11% of face value) 7. Preference Shareholders A/c Dr. 2,75,000 To Bank A/c 2,75,000 (Being the amount paid to preference share holders holding - 2,500 shares) Working Note: (1) Amount to be Transferred to Capital Redemption Reserve Account Face value of share to be redeemed = 3,00,000 Less: Proceeds from fresh issue (excluding premium) = (₹ 1,50,000) Amount to be transferred = 1,50,000