The books of Nova Tech Systems Ltd. showed the following balance on 31st December, 2025: 60,000 Equity Shares of ₹ 10 each fully paid; 36,000 12%…

In the books of Nova tech System Limited Journal Entries Particulars Dr. (₹) Cr. (₹) 12% Redeemable Preference Share Capital A/c Dr. 3,60,000 Premium on Redemption of Preference Shares A/c Dr. 72,000 To Preference Shareholders A/c 4,32,000 (Being the amount payable on redemption of 36,000 12% Redeemable Preference Shares transferred to Shareholders Account) Preference Shareholders A/c Dr. 4,29,600 To Bank A/c 4,29,600 (Being the amount paid on redemption of 35,800 preference shares) Bank A/c Dr. 66,000 To Equity Shares Capital A/c 60,000 To Securities Premium A/c 6,000 (Being the issue of 6,000 Equity Shares of ₹ 10 each at a premium of 10% as per Board's Resolution No....... Dated......) General Reserve A/c Dr. 2,40,000 Profit & Loss A/c Dr. 60,000 To Capital Redemption Reserve A/c (Working Note) 3,00,000 (Being the amount transferred to Capital Redemption Reserve A/c as per the requirement of the Act.) Capital Redemption Reserve A/c Dr. 2,40,000 To Bonus to Shareholders A/c 2,40,000 (Being the amount appropriated for issue of bonus share in the ratio of 5:2 as per shareholders Resolution No...... dated...) Bonus to Shareholders A/c Dr. 2,40,000 To Equity Share Capital A/c 2,40,000 (Being the utilisation of bonus dividend for issue of 24,000 equity shares of ₹ 10 each fully paid) Profit & Loss A/c Dr. 72,000 To Premium on Redemption of Preference Shares A/c 72,000 (Being premium on redemption of preference shares adjusted against to Profit & Loss Account) Working Note: (1) Partly paid-up preference shares cannot be redeemed. (2) Amount to be Transferred to Capital Redemption Reserve Account ₹ Face value of share to be redeemed 3,60,000 Less: Proceeds from fresh issue (excluding premium) (60,000) ₹ 3,00,000 (3) No bonus shares on 6,000 equity shares issued for redemption. Note: Bonus shares do not result in receipt of cash, and hence the increase in share capital on account of bonus issue cannot be considered in determination of amount to be transferred to Capital Redemption Reserve.