ILLUSTRATION 9:-Following are the figures extracted from the books of Midways Ltd. As on 30th June,2015 :5,000, 11% Preference shares of $ 100 each, 70 paid-up $ 3,50,000; 1,00,000 Equity shares of $ 10 eachfully paid-up $ 10,00,000; Securities premium reserve $ 50,000 ; Capital redemption reserve $ 2,00,000; General reserve $ 3,00,000; Investments in government securities (market value $ 2,25,000)$2,50,000.Under the terms of the issue, the preference shares are redeemable on 30th September, 2015 on thefollowing conditions:To sell the investments @ 90% of their market value.To create a statutory reserve by way of capitalisation as per the provisions of the CompaniesAct, 2013 leaving a balance of $ 25,000 in general reserve and $ 25,000 in securities premiumreserve.To issue further equity shares, to back up the redemption at $ 11 per share payable as follows:$ 2 on application;$ 3.50 (including premium) on allotment and the balance as call money on 1** January,(i)(ii)2016.The issue was fully subscribed and allotment was made on 1st September, 2015. The moniesdue on allotment were received by 25th September, 2015.The preference shares were redeemed after fulfilling the necessary conditions of Section 55 ofthe Companies Act, 2013. –You are required to calculate :(i)the amount to be capitalised; and(ii)the number of equity shares to be issued.

(i) In case of preference shares redemption, the amount equal to the nominal value of shares…

To issue further equity shares, to back up the redemption at $ 11 per share payable as follow $ 2 on application; i) $ 3.50 (including premium) on allotment and the balance as call money on 1" January, 2016. The issue was fully subscribed and allotment was made on 1st September, 2015. The monies due on allotment were received by 25th September, 2015. The preference shares were redeemed after fulfilling the necessary conditions of Section 55 o the Companies Act, 2013. – are required to calculate:

To issue further equity shares, to back up the redemption at $ 11 per share payable as follow $ 2 on application; i) $ 3.50 (including premium) on allotment and the balance as call money on 1" January, 2016. The issue was fully subscribed and allotment was made on 1st September, 2015. The monies due on allotment were received by 25th September, 2015. The preference shares were redeemed after fulfilling the necessary conditions of Section 55 o the Companies Act, 2013. – are required to calculate:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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