Redemption of Preference Shares – Corporate and Management Accounting MCQ

Going through the Redemption of Preference Shares – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.

Redemption of Preference Shares – Corporate and Management Accounting MCQs

Question 1.
Preference shares are those which carry the preferential rights as to -…………
(A) Payment of dividend at a fixed rate
(B) Return of capital on winding up of the company
(C) Both (A) & (B)
(D) Either (A) or (B)
Answer:
(C) Both (A) & (B)

Question 2.
……….. will be entitled to receive arrears of their dividend.
(A) Cumulative Preference Share
(B) Non Cumulative Preference Share
(C) Convertible Debentures
(D) All of the above
Answer:
(A) Cumulative Preference Share

Question 3.
Which of the following section of the Companies Act, 2013 prohibits to issue of shares at discount?
(A) Section 53
(B) Section 54
(C) Section 55
(D) Section 56
Answer:
(A) Section 53

Question 4.
Which of the following right may be given to preference share holder if provided by Articles?
(A) To participate in the surplus profits remaining after payment of equity dividend
(B) To receive arrears of dividend at the time of winding up
(C) To receive premium on redemption of preference shares
(D) All of above
Answer:
(D) All of above

Question 5.
Which of the following rights may be given to preference shareholder if provided by Articles?
(A) To participate in the surplus remaining after the equity shares are redeemed in winding up
(B) To participate in the surplus profits remaining after payment of equity dividend
(C) To receive arrears of dividend at the time of winding up
(D) All of above
Answer:
(D) All of above

Question 6.
Which of the following type of security can be issued at discount as per Companies Act, 2013?
(1) Equity Shares
(2) Sweat Equity Shares
(3) Preference Shares
(4) Debentures
(5) Bonds
Select the correct answer from the options given below –
(A) (1) & (3) only
(B) (1), (3) & (4) only
(C) (2), (4) & (5) only
(D) (3), (4) & (5) only
Answer:
(C) (2), (4) & (5) only

Question 7.
Which of the following security can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below –
(A) (I) only
(B) (III) only
(C) (I) & (IV) only
(D) (II) only
Answer:
(D) (II) only

Question 8.
Dividends are ………… of profits.
(A) Appropriation
(B) Charge
(C) Transfer
(D) None of above
Answer:
(A) Appropriation

Question 9.
A company limited by shares may, if authorized by its can issue preference shares which are or at the option of the company are liable to be redeemed
(A) Memorandum of Association
(B) Articles of Association
(C) Creditors of company
(D) Debtors of company
Answer:
(B) Articles of Association

Question 10.
The preference shares can be redeemed:
(A) Out of profits
(B) Out of the proceeds of fresh issue of equity shares
(C) Partly out of profits and partly out of the proceeds of fresh issue of equity shares
(D) Any of the above
Answer:
(D) Any of the above

Question 11.
When preference shares are redeemed out of profits such profit must be -………………..
(A) Profits which would otherwise available for dividend
(B) Capital Profit
(C) Revaluation Profit
(D) (B) or (C)
Answer:
(A) Profits which would otherwise available for dividend

Question 12.
Only …………. preferences shares can be redeemed.
(A) Partly paid up
(B) Fully paid up
(C) (A) & (B)
(D) None of above
Answer:
(B) Fully paid up

Question 13.
If any premium is to be payable on redemption of preference share, such premium has to be provided -……..
(A) Out of the profits which would otherwise available for dividend ie. free reserve
(B) Out of the securities premium account
(C) (A) or (B)
(D) None of above
Answer:
(C) (A) or (B)

Question 14.
Where preferences shares are redeemed out of profits, a sum equal to the nominal amount of the shares so redeemed must be transferred to …………..
(A) Capital Reserve A/c
(B) Capital Redemption Reserve A/c
(C) Capital Profit A/c
(D) Revenue Redemption Reserve A/c
Answer:
(B) Capital Redemption Reserve A/c

Question 15.
Capital Redemption Reserve Account may be applied to issue -…………
(A) Right shares
(B) Bonus debentures
(C) Bonus to employees of the company
(D) Bonus shares
Answer:
(D) Bonus shares

Question 16.
No company limited by shares, issue any preference shares which is redeemable after the expiry of a period of from ………….
the date of issue
(A) Ten years
(B) Five years
(C) Twenty years
(D) Twenty five years
Answer:
(C) Twenty years

Question 17.
The balance in capital redemption reserve is available for -………………
(A) Issue of fully paid-up bonus shares
(B) Redemption of preference shares
(C) Redemption of debentures
(D) All of the above
Answer:
(A) Issue of fully paid-up bonus shares

Question 18.
As per the Companies Act, 2013, preference shares which are issued by company engaged in infrastructure project can issue preference share which are redeemable after …………..
(A) 20 years
(B) 40 years
(C) 30 years
(D) 10 years
Answer:
(C) 30 years

Question 19.
A preference shares is one which enjoy a: ………………..
(A) Preferential right regarding payment of dividend
(B) Preferential right regarding allotment of shares
(C) Preferential right regarding payment of dividend and return of capital
(D) Preferential right regarding return of capital
Answer:
(C) Preferential right regarding payment of dividend and return of capital

Question 20.
Unless otherwise stated, a preference share is always deemed to be – …………
(A) Cumulative, participating and non-convertible
(B) Non-cumulative, non-participating and non-convertible
(C) Cumulative, non-participating and non-convertible
(D) Non-cumulative, participating and non-convertible
Answer:
(C) Cumulative, non-participating and non-convertible

Question 21.
As per the Companies Act, 2013 the companies cannot use the balance of Securities Premium for –
(A) Premium on redemption of debentures
(B) Issuing bonus shares
(C) Writing off commission on issue of shares or debentures
(D) Loss of issue of debentures
Answer:
(D) Loss of issue of debentures

Question 22.
Which of the following can be utilized in redemption of preference share capital account?
1. Profits available for dividend
2. Capital Reserve
3. Dividend Equalization Fund
4. Development Rebate Reserve
5. Profit Prior to Incorporation
Select the correct answer from the options given below –
(A) 1, 3 and 5 only
(B) 2 and 4 only
(C) 1 and 3 only
(D) 1, 2, 3 and 5 only
Answer:
(C) 1 and 3 only

Question 23.
Statement I:
The main purpose to create CRR is to keep the capital structure of the company variable.
Statement II:
Another purpose to create CRR is to protect the interest of creditors, since CRR cannot be utilized for payment of dividend.
Select the correct answer from the options given below –
(A) Statement I is true but Statement II is false
(B) Both Statement I and Statement II are false
(C) Statement I is false but Statement II is true
(D) Both Statement I and Statement II are true
Answer:
(C) Statement I is false but Statement II is true

Question 24.
To whom the bonus shares or rights shares can be issued?
(A) Equity shareholders
(B) Preference shareholders
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(A) Equity shareholders

Question 25.
Preference shares are entitled to a -………
(A) Variable rate of dividend.
(B) Fixed rate of dividend.
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(B) Fixed rate of dividend.

Question 26.
A preference shareholder can vote –
(A) When his special rights as a preference shareholder are being varied
(B) On any resolution for the winding up of the company
(C) When their dividend has not been paid for a period of 2 years or more.
(D) All of the above
Answer:
(D) All of the above

Question 27.
Redeemable Preference shares can be redeemed out of
(A) The sale proceeds of Investments
(B) The proceeds of a fresh issue of shares
(C) Share premium
(D) The proceeds of issue of debentures
Answer:
(B) The proceeds of a fresh issue of shares

Question 28.
Which of the following is correct journal entry for the ‘Amount due to preference shares on redemption?
Redemption of Preference Shares – Corporate and Management Accounting MCQ 15
Redemption of Preference Shares – Corporate and Management Accounting MCQ 16
Answer:
(C)

Question 29.
A company used balance of ‘General Reserve’ and ‘P & L A/c’ for redemption of preference share capital amount. Which of the following is correct journal entry for
Redemption of Preference Shares – Corporate and Management Accounting MCQ 17
Answer:
(C)

Question 30.
Which of the following statements is NOT TRUE with regard to redemption of Preference shares?
(A) Partly paid shares cannot be redeemed.
(B) The redemption of preference shares shall be taken as reduction of company’s authorized share capital.
(C) When shares are issued for redemption in future, it will not be treated as increase in capital.
(D) Preference share can be redeemed either out of the profit by capitalization or amount of fresh issue of shares.
Answer:
(B) The redemption of preference shares shall be taken as reduction of company’s authorized share capital.

Question 31.
When Redeemable Preference shares are due for redemption, the entry passed is
(A) Debit redeemable Preference Share capital A/c; Credit cash A/c
(B) Debit Redeemable Preference share capital A/c; credit Preference share-holders A/c
(C) Debit preference shareholders A/c; credit cash A/c
(D) Debit preference shareholders A/c; credit capital reduction A/c
Answer:
(B) Debit Redeemable Preference share capital A/c; credit Preference share-holders A/c

Question 32.
Which of the following statements is FALSE?
(A) Redeemable preference share can be issued, if authorized by the articles of association.
(B) The bonus issue can be made out of securities premium collected only in cash.
(C) Premium payable on redemption of preference share can be provided of company’s securities premium.
(D) Redeemable preference shares can be redeemed only out of profits of the company.
Answer:
(D) Redeemable preference shares can be redeemed only out of profits of the company.

Question 33.
Which of the following cannot be used for the purpose of creation of capital redemption reserve account?
(A) Profit & Loss A/c (credit balance)
(B) General Reserve A/c
(C) Dividend Equalization Reserve A/c
(D) Unclaimed Dividends A/c
Answer:
(D) Unclaimed Dividends A/c

Question 34.
According to section 52 of the Companies Act, 2013, the amount in the Securities Premium A/c cannot be used for the purpose of:
(A) Issue of fully paid bonus shares
(B) Writing off losses of the company
(C) For purchase of own securities
(D) Writing off commission or discount on issue of shares
Answer:
(B) Writing off losses of the company

Question 35.
Which of the following statements is TRUE?
(A) Capital redemption reserve cannot be used for writing off miscellaneous expenses and losses.
(B) Capital profit realized in cash cannot be used for payment of dividend.
(C) Reserves created by revaluation of fixed assets are not permitted to be capitalized.
(D) Dividend is payable on the calls paid in advance by shareholders.
Answer:
(A) Capital redemption reserve cannot be used for writing off miscellaneous expenses and losses.

Question 36.
Which of the following statements is incorrect?
(A) In a company liquidation Preference shares are entitled to priority return of capital.
(B) Preference shares have priority right to receive dividend.
(C) Normally Preference shares have no votes at meetings of shareholders.
(D) Preference shares are always cumulative, even if the name does not confirm the position.
Answer:
(A) In a company liquidation Preference shares are entitled to priority return of capital.

Question 37.
Which of the following statements is correct?
(A) Preference shares and debentures have priority right for a reward over ordinary shares.
(B) Debentures will not receive interest in a year when the company makes an operating loss.
(C) Preference shares will get dividend only when ordinary shares too receive them.
(D) Ordinary shares could be paid dividend even when a company has negative retained earnings.
Answer:
(A) Preference shares and debentures have priority right for a reward over ordinary shares.

Question 38.
For which one or more of the following reasons could a balance in the share premium be applied?
(a) To issue bonus shares.
(b) For distribution to shareholders as dividend.
(c) To write down the value of assets, particularly when they are impaired.
(d) To write off expenses of and commission on issuing the same shares
Answer:
(b) For distribution to shareholders as dividend.

Question 39.
For which one or more of the following reasons does company law attempt to protect the balance in the securities Premium account by specifying the reasons ) for which alone it may be applied
(a) It is part of the capital actually contributed by the shareholders.
(b) It should be protected from erosion as part of the creditor’s buffer.
(c) It is not realized in cash.
(d) It is immoral to allow a company to make profit by trading on its own shares.
Answer:
(c) It is not realized in cash.

Question 40.
During the year a company used the balance it had in its securities premium account for all of the following purposes.
(a) Write off expenses after formation of company.
(b) Write off the cost of issuing bonus shares.
(c) Write off goodwill acquired when another business was bought as a going concern.
(d) Write off expenses of issuing shares.
Answer:
(a) Write off expenses after formation of company.

Question 41.
N Ltd. had 9,000 8% preference shares of ₹ 100 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares. How much equity shares are required to be issued if new equity shares are to be issued at ₹ 10 each ‘
(A) 90,000 equity shares
(B) 1,00,000 equity shares
(C) 75,000 equity shares
(D) 93,333 equity shares
Answer:
(A) 90,000 equity shares
No. of shares to be issued \(=\frac{\text { Amount payable to preference shareholder }}{\text { Nominal value per share }}=\frac{9,00,000}{10}=90,000\)

Question 42.
S Ltd. had 9,000 8% preference shares of ₹ 100 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares. How much equity shares are required to be issued if new equity shares are to be issued at ₹ 12 for a premium including
(A) 90,000 equity shares
(B) 1,00,000 equity shares
(C) 75,000 equity shares
(D) 93,333 equity shares
Answer:
(A) 90,000 equity shares
No. of shares to be issued \(=\frac{\text { Amount payable to preference shareholder }}{\text { Nominal value per share }}=\frac{9,00,000}{10}=90,000\)

Question 43.
S Ltd. issued 2,000, 10% Preference shares of ₹ 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of ₹ 100 each at a premium of 20 % per share. At the time of redemption of Preference Shares, the amount to be transferred by the company to the Capital Redemption Reserve Account
(A) ₹ 50,000
(B) ₹ 40,000
(C) ₹ 2,00,000
(D) ₹ 2,20,000
Answer:
(A) ₹ 50,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 1
Note: Where any preference shares are redeemed out of profits, a sum equal to the nominal amount of the shares so redeemed must be transferred out of the profits of the company which would otherwise to be available for dividend to a reserve fund called ‘Capital Redemption Reserve Account’

Question 44.
During the year2005-2006, T Ltd. issued 20,000,12% Preference shares of ₹ 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2010 – 2011, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of ₹ 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve = ?
(A) ₹ 90,000
(B) ₹ 1,00,000
(C) ₹ 2,00,000
(D) ₹ 1,10,000
Answer:
(C) ₹ 2,00,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 2
Preference shares can be redeemed either:

  • Out of the profits of the company available for dividend or
  • Out of the proceeds of a fresh issue of shares made for the purpose of redemption.

Thus, Company can issue debenture but it cannot be utilized for redemption of preference shares.

Question 45.
Preference shares amounting to ₹ 2,00,000 are redeemed at a premium of 5%, by issue of equity shares amounting to ₹ 1,00,000 at a premium of 10%. The amount to be transferred to capital redemption reserve =?
(A) ₹ 1,05,000
(B) ₹ 1,00,000
(C) ₹ 2,00,000
(D) ₹ 1,11,000
Answer:
(B) ₹ 1,00,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 3
Note: Since P & L A/c has been used for redemption of preference shares ₹ 1,00,000 will be transferred to CRR.

Question 46.
The balance sheet of A Ltd. has 20,000 9% preference shares of ₹ 10 each. The company redeemed preference shares at a premium of ₹ 2 per share. For redemption it realized investments at a value of ₹ 1,60,000 (Book value ₹ 2,00,000). At the time of redemption balance in profit & loss account was ₹ 1,60,000. Issued at a premium of ₹ 40 per share, such a number of equity shares of ₹ 100 each for the purpose of redemption as to ensure that after the compliance with the requirements of the Companies Act, 2013, the credit balance in profit and loss account would be ₹ 25,000. No. of equity shares to be issued are & balance transferred to capital redemption account
(A) 1,200 equity shares & ₹ 80,000
(B) 800 equity shares & ₹ 1,20,000
(C) 1,450 equity shares & ₹ 55,000
(D) 1,050 equity shares & ₹ 95,000
Answer:
(C) 1,450 equity shares & ₹ 55,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 4
Arrows has been shown so that students can understand the working.

Question 47.
A Ltd. had 3,000, 12% Redeemable Preference Shares of ₹ 100 each, fully paid up. The company issued 25,000 equity shares of ₹ 10 each at par and 1,000 14% Debentures of ₹ 100 each. The amount to be transferred to Capital Redemption A/c will be ……………..
(A) Nil
(B) ₹ 50,000
(C) ₹ 2,00,000
(D) ₹ 3,00,000
Answer:
(B) ₹ 50,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 5
Note: Since P & L A/c has been used for redemption of preference shares so much amount will be transferred to CRR.

Question 48.
Ajay Ltd. decided to redeem 10,000 Preference shares of ₹ 10 each at 10% premium. Balance in profit & loss account is ₹ 60,000 and in Securities Premium A/c is ₹ 10,000. You are required to calculate the minimum number of equity shares to be issued for the purpose of redemption if new equity shares are to be issued at 20% premium having face value of ₹ 10 each……………….
(A) 4,000 equity shares
(B) 5,000 equity shares
(C) 3,333 equity shares
(D) 6,000 equity shares
Answer:
(A) 4,000 equity shares
Redemption of Preference Shares – Corporate and Management Accounting MCQ 6

Question 49.
Preference shares of ₹ 9,00,000 are redeemable by issuing 3,000 equity shares of ₹ 100 each at ₹ 140. The amount to be transferred to Capital Redemption Reserve……………..
(A) ₹ 3,80,000
(B) ₹ 5,00,000
(C) ₹ 4,20,000
(D) ₹ 6,00,000
Answer:
(D) ₹ 6,00,000

Question 50.
N Ltd. purchased fixed asset of ₹ 28,80,000. The consideration was paid by issue of 12% preference shares of ₹ 100 each at 20% premium. No. of preference to be issued –
(A) 32,000 preference shares
(B) 36,000 preference shares
(C) 28,800 preference shares
(D) 24,000 preference shares
Answer:
(D) 24,000 preference shares
No. of shares to be issued \(=\frac{\text { Cost of fixed asset }}{\text { Issue price }}=\frac{28,80,000}{120}=24,000\)

Question 51.
XYZ Ltd. has 1,000 Preference Shares (? 100 each). Calls-in-Arrear on 100 preference shares is ₹ 2,000. Securities Premium Account, Reserve Fund & Profit & Loss Account has a balance of ₹ 12,000; ₹ 29,600 & ₹ 10,000.
It was decided to redeem preference shares at a premium of 20%, by issue of sufficient number of equity shares of ₹ 10 each subject leaving balance of ₹ 10,000 in reserve fund. Fixed assets costing ₹ 20,000 were sold for ₹ 18,000. All payments were made except to holders of 50 shares who cannot be traced. How much equity shares are to be issued to give effect to above transactions.
(A) 5,960 equity shares
(B) 7,230 equity shares
(C) 6,840 equity shares
(D) 8,103 equity shares
Answer:
(C) 6,840 equity shares
Redemption of Preference Shares – Corporate and Management Accounting MCQ 7

Question 52.
On 30.6.2019 ₹ Ltd. has 6,750, 11% Preference shares of ₹ 100 each, fully paid-up. Under the terms of the issue, the preference shares are redeemable on 30.9.2019. To redeem preference shares it was decided to issue equity shares at ₹ 11 per share payable as follows:
(i) ₹ 2 on application.
(ii) ₹ 3.50 (including premium) on allotment and the balance as call money on 1.1.2020.
Issue of equity shares was fully subscribed and allotment was made on 1.9.2019. Amount due on allotment were received by 25.9.2019. Company does not have any free reserve. How many equity shares should be issued by the ₹ Ltd. to make the funds available for redemption of preference shares
(A) 1,50,000 equity shares
(B) 67,500 equity shares
(C) 1,22,727 equity shares
(D) 1,37,428 equity shares
Answer:
(A) 1,50,000 equity shares
Redemption of Preference Shares – Corporate and Management Accounting MCQ 8

Question 53.
Ledger Accounts of MN Ltd. show the following balances:
14% Preference Shares (₹ 100) — 5,00,000
Capital Reserve — 1,00,000
Securities Premium Account — 1,00,000
General Reserve — 2,00,000
Profit & Loss Account — 1,00,000
Preference shares are to be redeemed at 10% premium. Minimum fresh issue of equity shares of ₹ 100 each is to be made to for the purpose of this redemption.
No. of equity shares to be issued = ?
(A) 2,000 equity shares
(B) 1,500 equity shares
(C) 2,500 equity shares
(D) 3,000 equity shares
Answer:
(A) 2,000 equity shares
Redemption of Preference Shares – Corporate and Management Accounting MCQ 9

Question 54.
Extract of ledger balances of Kalpana Ltd. includes the following:
12% Preference shares capital — 2,00,000
Surplus — 40,000
Securities premium — 12,000
Under the terms of issue, the preference shares are redeemable at a premium of 10%. The directors desire to make a minimum fresh issue of equity shares of ₹ 10 each at a premium of 5% for redemption purpose.
Equity shares to be issued = ?
(A) 15,200 equity shares
(B) 14,700 equity shares
(C) 16,800 equity shares
(D) 13,600 equity shares
Answer:
(C) 16,800 equity shares
Redemption of Preference Shares – Corporate and Management Accounting MCQ 10
Note: For the purpose of writing off premium on redemption of preference shares only existing balance in securities premium can be used.

Question 55.
Following are details of Y Ltd.:
9% Preference Shares — 1,00,00,000
Call-in-Arrears — 2,00,000
(on above Preference Shares)
General Reserve — 60,00,000
Securities Premium — 18,00,000
Development Rebate Reserve — 40,00,000
It is ascertained that call-in-arrears are on account of final call on 10,000 shares held by 4 members whose where about not be known. ₹ 10,00,000 of the Development Rebate Reserve is free for distribution as dividend. Balance of General Reserve & Securities Premium are to be utilized for the purpose of redemption of and shortfall, if any, is to be made good by issue of equity shares of 10 each at a premium of 25%. The redemption of preference shares was duly carried out.
No. of equity shares to be issued = ?
(A) 5,00,000 equity shares
(B) 4,00,000 equity shares
(C) 3,00,000 equity shares
(D) 2,00,000 equity shares
Answer:
(D) 2,00,000 equity shares
Only fully paid-up preference shares can be redeemed.
Thus, preference shares to be redeemed = 1,00,000 – 10,000 = 90,000 shares.
Face value of preference shares to be redeemed = 90,00,000.
Redemption of Preference Shares – Corporate and Management Accounting MCQ 11

Question 56.
Following are details of PQR Ltd.:
12% Preference shares capital — 65,000
Surplus — 10,000
Bank balance — 31,000
In order to facilitate the redemption of preference shares at a premium of 10%, the company decided:
(a) To sell the investments of ₹ 18,500 for ₹ 15,000.
(b) To finance part of redemption from company funds, subject to, leaving a bank balance of ₹ 12,000.
(c) To issue minimum equity share of ₹ 50 each at a premium of ₹ 10 per
Answer:
(a) To sell the investments of ₹ 18,500 for ₹ 15,000.
Redemption of Preference Shares – Corporate and Management Accounting MCQ 12

Question 57.
Preference shares of ₹ 50,000 redeemed at 5% by issue of equity shares of ₹ 30,000 at 10% premium. How much amount must be transferred to Capital Redemption Reserve Account as per provisions of the Companies Act, 2013.
(A) ₹ 50,000
(B) ₹ 30,000
(C) ₹ 20,000
(D) ₹ 10,000
Answer:
(C) ₹ 20,000

Question 57.
Preference shares of ₹ 50,000 redeemed at 5% by issue of equity shares of ₹ 30,000 at 10% premium. How much amount must be transferred to Capital Redemption Reserve Account as per provisions of the Companies Act, 2013
(A) ₹ 50,000
(B) ₹ 30,000
(C) ₹ 20,000
(D) ₹ 10,000
Answer:
(C) ₹ 20,000

Question 58.
Roky Ltd. issued 30,000,12% preference shares of ₹ 10 each at premium of 5%, which are redeemable at par. It issued 20,000,14% Debentures of ₹ 10 each at premium of 10%. How much amount must be transferred to Capital Redemption Reserve Account as :per provisions of the Companies Act, 2013
(A) ₹ 3,00,000
(B) ₹ 1,00,000
(C) ₹ 2,00,000
(D) ₹ 5,00,000
Answer:
(A) ₹ 3,00,000

Question 59.
On September 4, 2019, the company issued 12,000 7% Debentures having a face value of ₹ 100 each at a discount of 2.5%. On September 12, the company issued 25.0, 8% Preference share of ₹ 100 each. On September 29, the company redeemed 30.0. 6% Preference shares of ₹ 100 each at a premium of 5% together with one month dividend thereon. Bank balance as on August 31,2019 was ₹ 29,25,000.
(A) ₹ 33,45,000
(B) ₹ 34,30,000
(C) ₹ 33,30,000
(D) ₹ 33,15,000
Answer:
(B) ₹ 34,30,000
Redemption of Preference Shares – Corporate and Management Accounting MCQ 13

Question 60.
Board of directors of a company decided to issue minimum number of equity shares of ₹ 10 each at 20% discount to redeem 4,500 preference shares of ₹ 100 each. If the maximum amount of divisible profit is ₹ 2,50,558. Calculate the number of equity shares to be issued. How much shares will be issued if they are issued in multiple of 50.
(A) 24,931 & 24,950
(B) 24,931 & 24,900
(C) 24,932 & 24,950
(D) 24,932 & 24,930
Answer:
(A) 24,931 & 24,950
Redemption of Preference Shares – Corporate and Management Accounting MCQ 14
Thus, 24,931 equity shares will have to be issued and in multiple of 50, total 24,950 equity shares will have to be issued.
Note:- Equity shares cannot be issued at discount MCQ is designed to check calculation abilities of the students.