Here is the post-closing trial balance of Easy Ltd as at 31 December 20x8:

Additional information:

• The company has an authorised capital consisting of 400 000 ordinary shares and 50 000 redeemable preference shares (fixed annual dividend of 7c/share).

• The preference shares are redeemable at the option of the company between 1 January 20x6 and 31 December 20x0 at a premium of 10c/share.

• On 1 January 20x9, the directors decided to redeem the preference shares and this was done during January.

You are required to:

1. Show against which account the premium on redemption of preference shares should be written off.

2. Show the journal entries (including cash transactions) to record the redemption of the preference shares assuming the redemption is made out of the proceeds of a fresh issue of 100 000 ordinary shares at 55c/share.

Transcribed Image Text:

Easy Ltd POST-CLOSING TRIAL BALANCE AS AT 31 DECEMBER 20x8 Debit Details Ordinary share capital (55 000 ordinary share) 50.000 redeemable preference share capital (fixed annual dividend of 7c/share) Retained earnings Sundry tangible assets Bank Fol. B1 B2 B4 B5 B6 170 000 00 75 000 00 00 245 000 Credit 110 000 00 50 000 00 85 000 00 245 000 00