The shareholders of Ustraco Ltd, a private company, wish to buy back 250,000 shares with a nominal value of \(£ 250,090\) from a retiring director at a premium of \(£ 100,000\). The company makes a fresh issue of 50,000 ordinary shares of \(£ 1\) for \(£ 125,000\).

Before the transactions, the company's statement of financial position was as follows:

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Calculate the permissible capital payment (PCP), the transfer to CRR (if any) and draft journal entries, and a statement of financial position that incorporates the above transactions.

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Net assets Share capital (1 shares) Share premium (Note 1)* Retained earnings 3 1,150,000 500,000 500,000 150,000 1,150,000 nare premium is attributable to the shares being redeemed