The ledger balances of Timely Ltd at 31 March 2018 were as follows:

A capital reduction scheme has been sanctioned under which the 450,000 preference shares are to be reduced to 60p each, fully paid; and the 900,000 ordinary shares are to be reduced to 25p each, fully paid.
Development expenditure and the debit balance of retained profits 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 statement of financial position as it would appear immediately after the reduction. Narrations are not required in connection with journal entries.

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Freehold premises Plant Inventory Accounts receivable Development expenditure* Cash at bank Retained profits (debit balance) 450,000 8% preference shares of £1 each 900,000 ordinary shares of £1 each Accounts payable £ 162,000 540,000 147,600 172,800 198,000 19,800 217,800 450,000 900,000 108,000