The following balances appeared in the Books of Mac Ltd. as on 31st December, 2023: 80,000, 10% Preferences shares of 100 each, 75 paid-up 60,00,00...

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The following balances appeared in the Books of Mac Ltd. as on 31st December, 2023: 80,000, 10% Preferences shares of 100 each, 75 paid-up 60,00,000 2,00,000 Equity share of 100 each fully paid-up 2,00,00,000 Securities Premium 6,50,000 Capital Redemption Reserve 42,00,000 General Reserve 85,00,000 Under the terms of their issue, the preference shares are redeemable on 31st March, 2024 at a premium of 5%. In order to finance the redemption, the company makes a right issue of 60,000 equity shares of 100 each at a premium of 10%, 25 being payable on application, ₹ 45 (including premi- um) on allotment and the balance on 1st August, 2024. The issue was fully subscribed and the allotment made on 1st March, 2024. The amount due on allotment was duly received by 25th March, 2024. The preference shares were redeemed after fulfilling the necessary conditions of section 55 of the Companies Act, 2013. You are required to pass the necessary Journal Entries (including narrations) to give effect to the above arrangement. Also prepare the Notes to accounts on Share Capital, Reserves and Surplus relevant to the Balance Sheet im- mediately after the redemption of preference share as on 31st March, 2024. Ignore date column in Journal. [June 2024, 15 Marks]

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Option : Correct Option. Solution: Journal Entries Date Particulars L.F. Amount (Dr.) Amount (Cr.) 10% Preference Share Final Call A/c Dr. [80000 X 25] To 10% Preference Share Capital A/ c (Being final call made due on 80000 shares of 100 each@75 per share) 20,00,000 20,00,000 Bank A/c Dr. To 10% Preference Share Final Call A/ c (Being money received) 20,00,000 20,00,000 Bank A/ c [60000 X 25] Dr. To Equity Share Application A/ c (Being money received on 60000 share @25/-) 15,00,000 15,00,000 Share Application A/ c Dr. To Equity Share Capital A/ c 15,00,000 15,00,000 (Being money transferred to. share Capital A/c) Share Allotment A/ c Dr. To Equity Share Capital A/c [60000 X 35] To Securities Premium A/c [60000 X 10] (Being allotment money made due) 27,00,000 21,00,000 6,00,000 Bank A/c Dr. To Equity Share Allotment A/ c (Being money received on • 60,000 shares @ 45 per share) 27,00,000 27,00,000 General Reserve A/ c Dr. To Capital Redemption Reserve A/ c (Being amount transferred to CRR for redemption of preference shares i.e. 8000000 - 1500000 - ~ 2100000) 44,00,000 44,00,000 10% Preference Share Capital A/ c Dr [80000 X 100) Premium on Redemption of Preference Dr. Shares [8000000 X 5%] To Preference Shareholder's A/ c (Being amount payable on redemption of preference shares) 80,00,000 4,00,000 84,00,000 Preference shareholder A/ c Dr. To Bank A/c (Being amount paid to preference shareholder's) 84,00,000 84,00,000 General Reserve A/ c Dr. To Premium on redemption of Preference Shares A/c (Being premium on redemption of preference shares written off) 4,00,000 4,00,000 Notes to Accounts (l) Share Capital Authorised Capital ---------- Equity Shares of 100 each Issued & Subscribed Capital 2,00,000 Equity share of 100 each, fully paid up 2,00,00,000 60,000 Equity share of 100 each, 60 paid up 36,00,000 2,36,00,000 (2) Reserve & Surplus Securities & Premium [6,50,000 + 6,00,000] 12,50,000 Capital redemption Reserve [42,00,000 + 44,00,000] 86,00,000 General Reserve [85,00,000 - 44,00,000 - 4,00,000] 37,00,000 1,35,50,000

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