(a) Explain the legal provisions regarding the establishment and subsequent use of the following reserves: (i) Share premium account. (2marks) (ii) Capital redemption reserve fund. (2marks) XYZ Company Ltd. is a retail provider with an authorized share capital of 800,000 Sh.20 ordinary shares and 250,0008% Sh. 20 redeemable preference shares. The following financial information reflects the position of the company as at 31 December 2001 after preparing the Trading. profit and loss account: The following resolutions relating to year ended 31 December 2001 have been passed by the board of directors of the company 1. Transfer Sh. 600,000 to General Reserve. 2. Provide for 4% final dividend and final preference dividend on shares issued and Outstanding on 31 December 2001. 3. Make a bonus issue of 200,000 fully paid ordinary shares from the retained profits Account. Required: - The appropriations account of XYZ Company Ltd. for the year ended 31 December 2001. (6 marks) (ii) The balance sheet of XYZ Company Ltd. as at 31 December 2001. (10 marks)