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WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a premium of Rs.10 per share. The company had a balance of Rs.50,000 in general reserve and Rs.27,000 in Profit & Loss a/c. For the purpose of redemption the company issued 5,000 equity shares of Rs. 10 each at a premium of 20%. The amount to be transferred to Capital Redemption Reserve will be
  • a)
    Rs. 50,000
  • b)
    Rs. 1,00,000
  • c)
    Rs. 60,000
  • d)
    Rs. 77,000
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a prem...
CRR = Face Value of Preference Shares - Face Value of Fresh Shares issued
CRR = 1,00,000 - 50,000 = Rs 50,000
(Ignore Premium on Redemption as well as Premium on Fresh Issue of shares)
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Most Upvoted Answer
WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a prem...
The amount to be transferred to Capital Redemption Reserve will be Rs. 50,000.

Explanation:

To calculate the amount to be transferred to Capital Redemption Reserve, we need to consider the following:

1. Number of preference shares redeemed:
WYE Ltd redeemed 1,000 preference shares.

2. Face value of preference shares:
The face value of each preference share is Rs. 100.

3. Premium on redemption:
The premium on redemption is Rs. 10 per share.

4. General reserve balance:
The company had a balance of Rs. 50,000 in the general reserve.

5. Profit Loss a/c balance:
The company had a balance of Rs. 27,000 in the Profit Loss a/c.

6. Number of equity shares issued:
The company issued 5,000 equity shares.

7. Face value of equity shares:
The face value of each equity share is Rs. 10.

8. Premium on equity shares:
The premium on equity shares is 20%.

Now, let's calculate the amount to be transferred to Capital Redemption Reserve:

1. Amount redeemed for preference shares:
Number of preference shares redeemed * (Face value + Premium on redemption)
= 1,000 * (Rs. 100 + Rs. 10)
= Rs. 1,10,000

2. Amount transferred from general reserve:
Amount redeemed for preference shares - General reserve balance
= Rs. 1,10,000 - Rs. 50,000
= Rs. 60,000

3. Amount transferred from Profit Loss a/c:
Amount redeemed for preference shares - Profit Loss a/c balance
= Rs. 1,10,000 - Rs. 27,000
= Rs. 83,000

4. Amount transferred from equity share premium:
Number of equity shares issued * Face value * Premium on equity shares
= 5,000 * Rs. 10 * 20%
= Rs. 10,000

5. Total amount to be transferred to Capital Redemption Reserve:
Amount transferred from general reserve + Amount transferred from Profit Loss a/c + Amount transferred from equity share premium
= Rs. 60,000 + Rs. 83,000 + Rs. 10,000
= Rs. 1,53,000

Since the question states that the correct answer is option 'A' (Rs. 50,000), there may be an error in the given options or the provided answer is incorrect. Please verify the options and answer with the relevant authority.
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WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a premium of Rs.10 per share. The company had a balance of Rs.50,000 in general reserve and Rs.27,000 in Profit & Loss a/c. For the purpose of redemption the company issued 5,000 equity shares of Rs. 10 each at a premium of 20%. The amount to be transferred to Capital Redemption Reserve will bea)Rs. 50,000b)Rs. 1,00,000c)Rs. 60,000d)Rs. 77,000Correct answer is option 'A'. Can you explain this answer?
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WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a premium of Rs.10 per share. The company had a balance of Rs.50,000 in general reserve and Rs.27,000 in Profit & Loss a/c. For the purpose of redemption the company issued 5,000 equity shares of Rs. 10 each at a premium of 20%. The amount to be transferred to Capital Redemption Reserve will bea)Rs. 50,000b)Rs. 1,00,000c)Rs. 60,000d)Rs. 77,000Correct 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 WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a premium of Rs.10 per share. The company had a balance of Rs.50,000 in general reserve and Rs.27,000 in Profit & Loss a/c. For the purpose of redemption the company issued 5,000 equity shares of Rs. 10 each at a premium of 20%. The amount to be transferred to Capital Redemption Reserve will bea)Rs. 50,000b)Rs. 1,00,000c)Rs. 60,000d)Rs. 77,000Correct 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 WYE ltd redeemed 1,000, 10% preference shares of Rs.100 each at a premium of Rs.10 per share. The company had a balance of Rs.50,000 in general reserve and Rs.27,000 in Profit & Loss a/c. For the purpose of redemption the company issued 5,000 equity shares of Rs. 10 each at a premium of 20%. The amount to be transferred to Capital Redemption Reserve will bea)Rs. 50,000b)Rs. 1,00,000c)Rs. 60,000d)Rs. 77,000Correct answer is option 'A'. Can you explain this answer?.
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