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O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?
  • a)
    Rs. Nil 
  • b)
    Rs. 1,904
  • c)
    Rs. 1,432
  • d)
    Rs. 8,000
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a pre...
Calculation of Redemption of Preference Shares:

The nominal value of preference shares = Rs. 2,00,000
Premium on redemption @ 4% = Rs. 8,000
Total amount paid on redemption = Rs. 2,08,000

Calculation of Issue of Equity Shares:

The amount required to meet the redemption = Rs. 2,08,000
Issue price of equity shares = Rs. 20 + 5% of Rs. 20 = Rs. 21
Number of equity shares issued = Rs. 1,98,084 ÷ Rs. 21 = 9424

Calculation of Balance in Share Premium Account:

Total amount received from the issue of equity shares = Rs. 1,98,084
Nominal value of equity shares issued = Rs. 20
Premium on issue of equity shares = Rs. 1
Total premium received on issue of equity shares = Rs. 9424 × Rs. 1 = Rs. 9424
Total balance in share premium account = Rs. 9424 - Rs. 8,000 = Rs. 1,432

Therefore, the balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares is Rs. 1,432.
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O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?a)Rs. Nilb)Rs. 1,904c)Rs. 1,432d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer?
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O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?a)Rs. Nilb)Rs. 1,904c)Rs. 1,432d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?a)Rs. Nilb)Rs. 1,904c)Rs. 1,432d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?a)Rs. Nilb)Rs. 1,904c)Rs. 1,432d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer?.
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