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Emami 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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Emami limited wishes to redeem its preference shares amounting ₹10000 ...
Journal Entry for Redemption of Preference Shares and Issuance of Equity Shares
Redemption of Preference Shares:
- Debit Preference Share Capital (₹10,000)
- Debit Securities Premium Reserve (₹500)
- Credit Bank Account (₹10,500)
Issuance of Equity Shares:
- Debit Bank Account (₹75,000)
- Credit Equity Share Capital (₹50,000)
- Credit Securities Premium Reserve (₹25,000)
Utilization of Profit and Loss Account Balance:
- Debit Profit and Loss Account (₹100,000)
- Credit General Reserve (₹100,000)
Explanation:
1. The company Emami Limited is redeeming its preference shares worth ₹10,000 at a premium of 5%. This means the company will pay back the shareholders their initial investment along with a premium of 5%.
2. To finance the redemption, the company is issuing 5000 equity shares of ₹10 each at a premium of 5%. This will bring in additional funds for the company.
3. The journal entries for the redemption of preference shares involve debiting the preference share capital and securities premium reserve accounts and crediting the bank account.
4. The journal entries for the issuance of equity shares involve debiting the bank account and crediting the equity share capital and securities premium reserve accounts.
5. The company also has a balance of ₹100,000 in the profit and loss account, which can be utilized by transferring it to the general reserve to strengthen the financial position of the company.
Redemption of Preference Shares:
- Debit Preference Share Capital (₹10,000)
- Debit Securities Premium Reserve (₹500)
- Credit Bank Account (₹10,500)
Issuance of Equity Shares:
- Debit Bank Account (₹75,000)
- Credit Equity Share Capital (₹50,000)
- Credit Securities Premium Reserve (₹25,000)
Utilization of Profit and Loss Account Balance:
- Debit Profit and Loss Account (₹100,000)
- Credit General Reserve (₹100,000)
Explanation:
1. The company Emami Limited is redeeming its preference shares worth ₹10,000 at a premium of 5%. This means the company will pay back the shareholders their initial investment along with a premium of 5%.
2. To finance the redemption, the company is issuing 5000 equity shares of ₹10 each at a premium of 5%. This will bring in additional funds for the company.
3. The journal entries for the redemption of preference shares involve debiting the preference share capital and securities premium reserve accounts and crediting the bank account.
4. The journal entries for the issuance of equity shares involve debiting the bank account and crediting the equity share capital and securities premium reserve accounts.
5. The company also has a balance of ₹100,000 in the profit and loss account, which can be utilized by transferring it to the general reserve to strengthen the financial position of the company.
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Emami 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?
Question Description
Emami 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 Emami 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 Emami 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?.
Emami 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 Emami 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 Emami 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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Emami 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?, a detailed solution for Emami 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? has been provided alongside types of Emami 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? theory, EduRev gives you an
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