Redemption of Preference shares Question Bank
BCOM 2nd SEM CBCS Pattern
In this post you will get Redemption of Preference shares Question Bank for BCOM 2nd SEM CBCS Pattern. In this Question Bank we will cover Questions asked in the following universities exam:
– Dibrugarh UniversityÂ
– Gauhati University
– Assam University
1. (2018) Following are the Ledger balances of X Ltd. As on 31st March, 2018:
Ledger balances as on 31st March, 2018
|
Credit balances |
Rs. |
Debit balances |
Rs. |
|
Share Capital: 10000 Equity Shares of Rs. 100 each fully paid 4000, 6% Redeemable Preference Shares of Rs. 100 each fully paid Profit and Loss A/c General Reserve Securities Premium Creditors |
10,00,000
4,00,000
20,000 4,40,000 20,000 1,00,000 |
Sundry Assets Bank Balance |
12,20,000 7,60,000 |
|
|
19,80,000 |
|
19,80,000 |
On the above mentioned date, the company redeemed the preference shares at a premium of 5%. Show the Journal Entries and Prepare the Amended Balance Sheet. 8+4=12
2. (2017) Ledger balances of Kaveri Ltd. as at 31st March, 2016 were as follows:
|
Credit Balances |
Rs. |
Debit Balances |
Rs. |
|
Share Capital:Â Equity Shares of 7% Redeemable Preference Security Premium Reserve Capital Reserve Revenue Reserve 6% Debentures Creditors |
5,00,000
3,00,000 50,000 1,00,000 2,00,000 3,00,000 1,50,000 |
Fixed Assets Investments Cash Other Current Assets |
8,00,000 1,00,000 2,00,000 5,00,000 |
|
|
16,00,000 |
|
16,00,000 |
Both the redeemable preference shares and debentures were due for redemption on 1st April, 2016. Kaveri Ltd. took the following steps in this respect:
– It issued 2000 Equity shares of Rs. 100 each at a premium of 10%, the shares were fully subscribed and paid for.
– It sold the investments for Rs. 90,000.
– It arranged a bank loan to the extent necessary.
The redemption was fully carried out. Give Journal Entries to record the above and prepare the Balance Sheet of the company immediately afterwards.
3. (2016) The Balance Sheet of J. K. Ltd. as on 31st March, 2016 is given below:
|
Liabilities |
Amount |
Assets |
Amount |
|
9% Redeemable Preference Shares of Rs. 100each fully paid-up Equity Shares of Rs. 5 each fully paid-up General Reserve Profit & Loss A/c Sundry Creditors |
 6,50,000 2,25,000 1,00,000 2,60,000 57,500 |
Sundry Assets Investments Cash at Bank |
9,50,000 2,75,000 67,500 Â |
|
 |
12,92,500 |
 |
12,92,500 |
The Preference Shares are to be redeemed on 1st April, 2016 at a premium of 7 ½ %. In order to facilitate redemption, the company had decided the following:
– To sell the investments for Rs. 2,60,000.
– To finance a part of the redemption from the company’s Reserve Fund.
– To issue sufficient equity shares at a premium of Rs. 1 per share to raise the balance of the fund required.
– Minimum bank balance to be retained at Rs. 10,500. The investments were sold, the equity shares were fully subscribed and the preference shares were dully redeemed. Show the Journal Entries and prepare the balance sheet after redemption.    7+5=12
4. (2007)A Limited company has authorized equity capital of Rs. 20 Lakhs divided into shares of Rs. 100 each. The paid-up capital was Rs. 1250000. Besides, the company had 9% Redeemable cumulative shares of Rs. 10 each for Rs. 250000, the balance on the other account were
Securities premium                     Rs. 18 00000
Profit and loss account               Rs. 72000     Â
General reserve               Rs. 340000
Included in sundry assets were investments of the face value of Rs. 30000 carried in the books at a cost of Rs. 34000. The company decided to redeem cumulative preference shares at a premium of 10% partly by the issue of equity shares of the face value of Rs. 120000 at a premium of 10%. Investments were sold 105% of the face value. All preference share-holders were paid off except 3 shareholders holding 250 shares. After redemption of cumulative pref. shares, fully paid bonus shares were issued in the ratio of 1:4. Pass the journal entries for the above transaction.
PRACTICAL QUESTION BANK (FROM 2012 TO 2022)
ISSUE OF SHARES, RIGHT SHARES AND BONUS SHARES
REDEMPTION OF PREFERECE SHARES
ISSUE AND REDEMPTION OF DEBENTURES
AMALGAMATION AND EXTERNAL RECONSTRUCTION
Important Theory Questions for 2023 BCOM Exams available here.