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(a) Calculate minimum fresh issue of equity shares required for redemption of preferences share on the basis of the following information:
(i) 20,000 preference share of 10 each are to be redeemed at 10% premium
(ii) Balance is surplus account ₹80,000
(iii) Balance in securities premium reserve account ₹10,000
(iv) Fresh issue of equity shares of ₹10 each is to be made at 10% premium
What will be your answer if the redemption of preferences shares is to be made at 20% premium. (?
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(a) Calculate minimum fresh issue of equity shares required for redemp...
Minimum Fresh Issue of Equity Shares Required for Redemption of Preference Shares

Given Information:
(i) 20,000 preference shares of ₹10 each are to be redeemed at 10% premium
(ii) Surplus account balance: ₹80,000
(iii) Securities premium reserve account balance: ₹10,000
(iv) Fresh issue of equity shares of ₹10 each is to be made at 10% premium

Calculation:
1. Redemption amount per preference share = Face value + Premium
= ₹10 + (10% of ₹10) = ₹11
2. Total redemption amount for 20,000 preference shares = 20,000 * ₹11 = ₹2,20,000
3. Surplus available for redemption = Surplus account balance + Securities premium reserve
= ₹80,000 + ₹10,000 = ₹90,000
4. Minimum fresh issue of equity shares required = Total redemption amount - Surplus available
= ₹2,20,000 - ₹90,000 = ₹1,30,000
Therefore, the minimum fresh issue of equity shares required for the redemption of preference shares at a 10% premium is ₹1,30,000.

If the redemption of preference shares is to be made at 20% premium:
1. Redemption amount per preference share = Face value + Premium
= ₹10 + (20% of ₹10) = ₹12
2. Total redemption amount for 20,000 preference shares = 20,000 * ₹12 = ₹2,40,000
3. Surplus available for redemption = Surplus account balance + Securities premium reserve
= ₹80,000 + ₹10,000 = ₹90,000
4. Minimum fresh issue of equity shares required = Total redemption amount - Surplus available
= ₹2,40,000 - ₹90,000 = ₹1,50,000
Therefore, if the redemption of preference shares is to be made at a 20% premium, the minimum fresh issue of equity shares required would be ₹1,50,000.
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(a) Calculate minimum fresh issue of equity shares required for redemption of preferences share on the basis of the following information:(i) 20,000 preference share of 10 each are to be redeemed at 10% premium(ii) Balance is surplus account ₹80,000(iii) Balance in securities premium reserve account ₹10,000(iv) Fresh issue of equity shares of ₹10 each is to be made at 10% premiumWhat will be your answer if the redemption of preferences shares is to be made at 20% premium. (?
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