The financial position of R Limited at 31st March, 2017 was as follows:

As per the terms of issue of the Preference Shares these were redeemable at a premium of 5 per cent on 1st April, 2017 and it was decided to arrange this as far as possible out of the company’s resources subject to leaving a balance of ~ 1,00,000 in the credit of the Profit and Loss Account. It was also decided to raise the balance amount of issue of 34,000 equity shares of ~ 10 each at a premium of ~ 2.50 per share.

You are required to pass the necessary journal entries giving effect to the above arrangements in the company’s books.

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1. EQUITY AND LIABILITIES (1) Shareholders' Funds: (a) Share Capital (b) Reserves and Surplus (c) Money Received against Share Warrants (2) Share Application Money Pending Allotment: (3) Non-current Liabilities: (4) Current Liabilities: (a) Short-term Borrowings (b) Trade Payables (c) Other Current Liabilities TOTAL II. ASSETS (1) Non-current Assets: (a) Fixed Assets (1) Tangible Assets (2) Current Assets: (a) Current Investments (b) Inventories (c) Trade Receivables (d) Cash and Cash Equivalents TOTAL Notes to Accounts: (1) Share Capital Balance Sheet of R Ltd. as at 31st March, 2017 Particulars (1) Particulars Authorised Capital: 50,000 Equity Shares of * 10 each 80,000, 5% Preference Shares of * 10 each Issued, Subscribed and Paid-up Capital: 40,000 Equity Shares of* 10 each fully paid 80,000, 5% Redeemable Preference Shares of *10 each fully paid 5,00,000 8,00,000 13,00,000 4,00,000 8,00,000 12,00,000 (2) Reserve and Surplus Particulars Securities Premium Profit and Loss Account Note No. (2) EN Amount (₹) (3) 12,00,000 6,60,000 Corporate Accounting 5.41 1,20,000 2,00,000 1,00,000 22,80,000 12,00,000 80,000 2,00,000 2,00,000 6,00,000 22,80,000 1,00,000 5,60,000 6,60,000