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S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?
  • a)
    Rs. 50,000
  • b)
    Rs. 40,000
  • c)
    Rs. 2,00,000
  • d)
    Rs. 2,20,000
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, whi...
Given:
- S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par.
- These preference shares are redeemable at a premium of 10%.
- For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share.

To Find:
- The amount to be transferred by the company to the Capital Redemption Reserve Account at the time of redemption of preference shares.

Solution:
To find the amount to be transferred to the Capital Redemption Reserve Account, we need to calculate the premium amount on the redemption of preference shares.

Step 1: Calculation of redemption price per preference share:
The preference shares were issued at a par value of Rs. 100 each, and they are redeemable at a premium of 10%. Therefore, the redemption price per preference share can be calculated as follows:
Par value + Premium = Rs. 100 + (10/100) * Rs. 100 = Rs. 110

Step 2: Calculation of total redemption amount:
Number of preference shares issued = 2,000
Redemption price per preference share = Rs. 110
Total redemption amount = Number of preference shares * Redemption price per preference share = 2,000 * Rs. 110 = Rs. 2,20,000

Step 3: Calculation of premium on the redemption of preference shares:
Premium on redemption = Total redemption amount - Par value of preference shares
Par value of preference shares = Number of preference shares * Par value per share = 2,000 * Rs. 100 = Rs. 2,00,000
Premium on redemption = Rs. 2,20,000 - Rs. 2,00,000 = Rs. 20,000

Step 4: Amount to be transferred to the Capital Redemption Reserve Account:
The amount to be transferred to the Capital Redemption Reserve Account is equal to the premium on the redemption of preference shares, which is Rs. 20,000.

Therefore, the correct answer is option 'A' - Rs. 20,000.
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S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?a)Rs. 50,000b)Rs. 40,000c)Rs. 2,00,000d)Rs. 2,20,000Correct answer is option 'A'. Can you explain this answer?
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S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?a)Rs. 50,000b)Rs. 40,000c)Rs. 2,00,000d)Rs. 2,20,000Correct answer is option 'A'. 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 S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?a)Rs. 50,000b)Rs. 40,000c)Rs. 2,00,000d)Rs. 2,20,000Correct answer is option 'A'. 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 S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?a)Rs. 50,000b)Rs. 40,000c)Rs. 2,00,000d)Rs. 2,20,000Correct answer is option 'A'. Can you explain this answer?.
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