The ledger balances of Tick Tick Ltd at 31 March 20X1 were as follows:

A capital reduction scheme has been sanctioned under which the 250,000 preference shares are to be reduced to 80p each, fully paid; and the 500,000 ordinary shares are to be reduced to 20p each, fully paid. Development expenditure and the debit balance on profit and loss account are to be written off, the balance remaining being used to reduce the book value of the plant.

Required:

Prepare the journal entries recording the reduction scheme and the balance sheet as it would appear immediately after the reduction. Narrations are not required in connection with journal entries.

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Freehold premises Plant Stock Debtors Development expenditure* Cash at bank Profit and loss (debit balance) 250,000 8 per cent preference shares of £1 each 500,000 ordinary shares of £1 each Creditors £ 90,000 300,000 82,000 96,000 110,000 11,000 121,000 250,000 500,000 60,000