The Balance Sheet of Ultra-Modern Ltd. as at 31st March, 2011 is as follows: Liabilities Assets...

 

Transcribed Image Text:

The Balance Sheet of Ultra-Modern Ltd. as at 31st March, 2011 is as follows: Liabilities Assets Share Capital Fixed Assets: Land and Building Issued and Subscribed Capital: 1,000, 9% Redeemable Plant and Machinery Preference Shares of 100 each 18,000 Equity Shares of 10 each Reserves and Surplus: Securities Premium Account General Reserve Account Profit and Loss Account Current Liabilities: Sundry Creditors Furniture and Fixtures 1,00,000 Current Assets: Stock 1,80,000 Debtors 50,000 4,50,000 Investments 20,000 Bank 60,000 40,000 2,00,000 60,000 9,000 60,000 25,000 54,000 42,000 4,50,000 The Company decided to redeem its preference shares at a premium of 5% on 1st April, 2011. A fresh issue of 3,000 equity shares of 10 each was made at 9 per share, payable in full on 1st April, 2011. These were fully subscribed and all moneys were duly collected. All the investments were sold for 50,000 to provide cash for redemption of preference shares. The directors wish that only a minimum reduction should be made in the revenue reserves. You are required to give the journal entries, including those relating to cash to record the above transactions and to draw up the balance sheet as it would appear after redemption of preference shares. The Balance Sheet of Ultra-Modern Ltd. as at 31st March, 2011 is as follows: Liabilities Assets Share Capital Fixed Assets: Land and Building Issued and Subscribed Capital: 1,000, 9% Redeemable Plant and Machinery Preference Shares of 100 each 18,000 Equity Shares of 10 each Reserves and Surplus: Securities Premium Account General Reserve Account Profit and Loss Account Current Liabilities: Sundry Creditors Furniture and Fixtures 1,00,000 Current Assets: Stock 1,80,000 Debtors 50,000 4,50,000 Investments 20,000 Bank 60,000 40,000 2,00,000 60,000 9,000 60,000 25,000 54,000 42,000 4,50,000 The Company decided to redeem its preference shares at a premium of 5% on 1st April, 2011. A fresh issue of 3,000 equity shares of 10 each was made at 9 per share, payable in full on 1st April, 2011. These were fully subscribed and all moneys were duly collected. All the investments were sold for 50,000 to provide cash for redemption of preference shares. The directors wish that only a minimum reduction should be made in the revenue reserves. You are required to give the journal entries, including those relating to cash to record the above transactions and to draw up the balance sheet as it would appear after redemption of preference shares.

Answer rating: 100% (QA)

Transaction General Journal 1 2 3 4 5 Bank Securities Premium Account Equity Share Capital to r... View the full answer