Redemption of Preference shares Question Bank [BCOM 2nd Sem CBCS Pattern 2023]

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 University 

– Gauhati University

– Assam University

redemption of preference shares question bank

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:  Equity Shares of
Rs. 100 each, fully paid

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

 

 

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      

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

FINAL ACCOUNTS OF COMPANIES

INTERNAL RECONSTRUCTION

AMALGAMATION AND EXTERNAL RECONSTRUCTION

ACCOUNTS OF BANKING COMPANIES

CASH FLOW STATEMENT

ACCOUNTS OF HOLDING COMPANIES

Important Theory Questions for 2023 BCOM Exams available here.

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