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Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:
- a)Rs. 55,000.
- b)Rs. 50,000.
- c)Rs. 45,000.
- d)Rs. 57,500.
Correct answer is option 'B'. Can you explain this answer?
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Preference shares amounting to Rs. 1,00,000 are redeemed at a premium ...
Calculation of premium on redemption:
- Face value of preference shares redeemed: Rs. 1,00,000
- Premium on redemption: 5% of face value = Rs. 5,000
- Total amount paid on redemption: Rs. 1,00,000 + Rs. 5,000 = Rs. 1,05,000
Calculation of amount received from issue of shares:
- Amount of shares issued: Rs. 50,000
- Premium on issue: 10% of face value = Rs. 5,000
- Total amount received from issue: Rs. 50,000 + Rs. 5,000 = Rs. 55,000
Transfer to Capital Redemption Reserve Account:
- As per Section 80 of the Companies Act, 1956, a company is required to transfer a sum equal to the nominal value of the shares redeemed, out of the profits of the company which would otherwise be available for dividend, to a special reserve called the Capital Redemption Reserve Account.
- Therefore, the amount to be transferred to Capital Redemption Reserve Account in this case would be the nominal value of the preference shares redeemed, which is Rs. 1,00,000.
Final Answer:
- Amount to be transferred to Capital Redemption Reserve Account: Rs. 1,00,000
- Therefore, option 'B' - Rs. 50,000 is not the correct answer.
- Face value of preference shares redeemed: Rs. 1,00,000
- Premium on redemption: 5% of face value = Rs. 5,000
- Total amount paid on redemption: Rs. 1,00,000 + Rs. 5,000 = Rs. 1,05,000
Calculation of amount received from issue of shares:
- Amount of shares issued: Rs. 50,000
- Premium on issue: 10% of face value = Rs. 5,000
- Total amount received from issue: Rs. 50,000 + Rs. 5,000 = Rs. 55,000
Transfer to Capital Redemption Reserve Account:
- As per Section 80 of the Companies Act, 1956, a company is required to transfer a sum equal to the nominal value of the shares redeemed, out of the profits of the company which would otherwise be available for dividend, to a special reserve called the Capital Redemption Reserve Account.
- Therefore, the amount to be transferred to Capital Redemption Reserve Account in this case would be the nominal value of the preference shares redeemed, which is Rs. 1,00,000.
Final Answer:
- Amount to be transferred to Capital Redemption Reserve Account: Rs. 1,00,000
- Therefore, option 'B' - Rs. 50,000 is not the correct answer.
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Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer?
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Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer?.
Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Preference shares amounting to Rs. 1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be:a)Rs. 55,000.b)Rs. 50,000.c)Rs. 45,000.d)Rs. 57,500.Correct answer is option 'B'. Can you explain this answer?.
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