Answered step by step
Verified Expert Solution
Question
1 Approved Answer
QUESTIONS 26. The capital structure of a company consists of 25,000 Equity Shares of $10 each fully paid and 1,500 12% Preference Shares of $
QUESTIONS 26. The capital structure of a company consists of 25,000 Equity Shares of $10 each fully paid and 1,500 12% Preference Shares of $ 100 each, $ 80 per share paid up. Undistributed profits and reserves are as under : General Reserve $ 75,000 (out of which a minimum balance of $ 25,000 is to be maintained). Surplus Account $ 15,000. Investment Allowance Reserve $10,000 (out of which $ 6,000 is not free for distribution as dividend). Securities Premium Reserve Account $4,000. Preference Shares are now to be redeemed at a premium of 10%. A final call of $ 20 per share was made. 50 holders holding altogether 350 shares failed to pay the call money, and the Directors went on redemption utilising the undistributed profit and reserves. New Equity Shares of $10 each were issued to the public to the extent necessary to comply with the requirements of law. At the time of redemption, 5 holders holding altogether 160 shares were untraceable. The Directors decided to maintain a minimum Cash and Bank Balance for $75,000 and also agreed to provide necessary sums by way of temporary loan to the company (free of interest). Cash and bank balance immediately before redemption $ 30,000. Assuming the above mentioned transactions are carried out, prepare : (1) 12% Preference Share Capital Account, (2) Combined Cash and Bank Account, and (3) Preference Shareholders Account. was
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started