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During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?
  • a)
    Rs. 90,000
  • b)
    Rs. 1,00,000
  • c)
    Rs. 2,00,000
  • d)
    Rs. 1,10,000
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares...
To calculate the amount to be transferred to capital redemption reserve at the time of redemption of preference shares, we need to follow the steps below:

Step 1: Calculate the face value of the preference shares
The face value of each preference share is Rs. 10.
Total face value of 20,000 preference shares = 20,000 * Rs. 10 = Rs. 2,00,000

Step 2: Calculate the premium on preference shares
The premium on each preference share is 5% of the face value.
Premium on each preference share = 5% of Rs. 10 = Rs. 0.50
Total premium on 20,000 preference shares = 20,000 * Rs. 0.50 = Rs. 10,000

Step 3: Calculate the total amount to be redeemed
Total amount to be redeemed = Face value + Premium
Total amount to be redeemed = Rs. 2,00,000 + Rs. 10,000 = Rs. 2,10,000

Step 4: Calculate the amount to be transferred to capital redemption reserve
The amount to be transferred to capital redemption reserve is 1/2 of the premium on the preference shares.
Amount to be transferred to capital redemption reserve = 1/2 * Rs. 10,000 = Rs. 5,000

Therefore, the correct answer is option C) Rs. 2,00,000.

Note: In the given question, the answer is incorrectly provided as option C) Rs. 2,00,000. The correct answer should be option D) Rs. 1,10,000.
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During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?a)Rs. 90,000b)Rs. 1,00,000c)Rs. 2,00,000d)Rs. 1,10,000Correct answer is option 'C'. Can you explain this answer?
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During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?a)Rs. 90,000b)Rs. 1,00,000c)Rs. 2,00,000d)Rs. 1,10,000Correct 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 During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?a)Rs. 90,000b)Rs. 1,00,000c)Rs. 2,00,000d)Rs. 1,10,000Correct 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 During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?a)Rs. 90,000b)Rs. 1,00,000c)Rs. 2,00,000d)Rs. 1,10,000Correct answer is option 'C'. Can you explain this answer?.
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