The balance sheet of Tarns PLC is as follows:

he company proposes to redeem the preference shares at a premium of 10 per cent by finding the cash from alreadv available internal sources.
Required:
Assuming that the company (i) originally issued the preference shares at a premium of 10p per share, and (ii) originally issued the preference shares at par:

(a) Show the ledger entries necessary to record this redemption.

(b) Prepare the new balance sheet.

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1 ordinary shares 6% 1 preference shares Share premium Undistributed profit 50,000 Cash 35,000 30,000 Other net assets 85,000 5,000 35,000 120,000 120,000