Multiple choice

The following balances in the books of ABC Ltd: 10% Redeemable Preference Share Capital Rs. 4,00,000 General Reserve Rs. 90,000 Securities Premium Rs. 20,000 Profit and Loss (Cr.) Rs. 48,000 The Company redeems 6% Redeemable Preference Shares by issue of Equity Shares of Rs. 10 each. Fresh issue of shares is made in lots of 100 shares. Calculate the number of fresh shares to be issued.

  1. 40,000

  2. 26,200

  3. 24,200

  4. 35,200
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Nominal value of 6% Redeemable Preference Shares Rs. 4,00,000 Redemption out of Profits: P/L Balance Rs. 48000 + General Reserve Rs. 90,000 = 1,38,000 The balance by fresh issue: 4,00,000 - 1,38,000 = 2,62,000 Face Value of fresh Equity Share: Rs. 10 No. of shares to be issued: 2,62,000 / 10 = 26,200

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