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Example 5 $1,000 debentures, issued at a premium of 5% Redeemed at a premium of 20% Case 1: 1,200 $1 ordinary shares at par These balances may not be the same, as some funds may have been used up in the bonus issue and redemption Balance before new issue Premium on new issue Balance after new issue Less: Amount transferred to the redemption account (should be the lower of the balance after the new issue Case 1 $ 10 - 10 or 10 the original premium on the issue) Balance after redemption 1000*5%=50 17 Dr. Cr. 1000 1000 1200 1200 Debentures Debenture Redemption Being redemption of debehtres -- Bank Ordinary Share Being issue of ordinary shares Share Premium Profit and loss Debenture Redemption (1000*20%) Being premium on redemption Debenture Redemption Bank (1000*1.2) Being amount paid on redemption 10 190 200 1200 1200