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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 Balance in Share Premium Account:
1. Redemption of Preference Shares:
- Redemption amount = Rs. 2,00,000
- Premium on redemption = 4%
- Premium paid = 4% of Rs. 2,00,000 = Rs. 8,000
2. Issue of New Shares:
- Value of new shares issued = Rs. 1,98,084
- Face value of each share = Rs. 20
- Number of shares issued = Rs. 1,98,084 / Rs. 20 = 9,904 shares
- Premium per share = 5%
- Total premium received = 5% of Rs. 1,98,084 = Rs. 9,904
3. Adjustment in Share Premium Account:
- Total premium received from new shares = Rs. 9,904
- Less: Premium paid on redemption = Rs. 8,000
- Balance in Share Premium Account = Rs. 1,904
Therefore, the balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares is Rs. 1,904 (Option B).
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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 Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce 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 Commerce 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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