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Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above?
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Emma limited wishes to redeem its preference shares amounting ₹10000 a...
Journal Entry for Redemption of Preference Shares and Issue of Equity Shares:
Explanation:
- The redemption of preference shares involves debiting the Preference Share Capital account for the face value of shares being redeemed and crediting the Securities Premium account for the premium paid on redemption. The bank account is credited for the total amount paid.
- The issue of equity shares includes debiting the Bank account for the total amount received from issuing 5000 equity shares at ₹10 each with a premium of 5%. The Equity Share Capital account is credited for the face value of the shares, and the Securities Premium account is credited for the premium received.
- The transfer of profit to Equity Share Capital involves debiting the Profit and Loss Account for the total profit being transferred and crediting the Equity Share Capital account to reflect the increase in the company's equity.
These journal entries help in accurately recording the financial transactions related to the redemption of preference shares, the issue of equity shares, and the transfer of profits in the company's books.
- Redemption of Preference Shares:
- Issue of Equity Shares:
- Transfer of Profit to Equity Share Capital:
Dr. Preference Share Capital - ₹10,000
Cr. Securities Premium - ₹500
Cr. Bank - ₹10,500
Dr. Bank - ₹50,000
Cr. Equity Share Capital - ₹50,000
Cr. Securities Premium - ₹2,500
Dr. Profit and Loss Account - ₹100,000
Cr. Equity Share Capital - ₹100,000
Explanation:
- The redemption of preference shares involves debiting the Preference Share Capital account for the face value of shares being redeemed and crediting the Securities Premium account for the premium paid on redemption. The bank account is credited for the total amount paid.
- The issue of equity shares includes debiting the Bank account for the total amount received from issuing 5000 equity shares at ₹10 each with a premium of 5%. The Equity Share Capital account is credited for the face value of the shares, and the Securities Premium account is credited for the premium received.
- The transfer of profit to Equity Share Capital involves debiting the Profit and Loss Account for the total profit being transferred and crediting the Equity Share Capital account to reflect the increase in the company's equity.
These journal entries help in accurately recording the financial transactions related to the redemption of preference shares, the issue of equity shares, and the transfer of profits in the company's books.
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Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above?
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Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above?.
Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Emma limited wishes to redeem its preference shares amounting ₹10000 at a premium of 5% and for this purpose issues 5000 equity shares of ₹10 each at premium of 5%.The company has also a balance of ₹,100000 in profit and loss account journalise the above?.
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