Rainbow Ltd. has issued 10,000, 12% redeemable preference shares (Face value ₹ 1,000 each). The shares are to be redeemed at a premium of 20%. The redemption proceeds will be raised through issue of equity share capital.

Answer 4(a) Particulars Dr. (in ₹) Cr. (in ₹) Bank A/c Dr. To Equity Share Application and Allotment A/c (Being application of 50,000 equity shares at ₹ 240 a share including premium of ₹ 230 per share) Dr. 1,20,00,000 1,20,00,000 Equity Share Application and Allotment A/c Dr. To Equity Share Capital A/c (50,000 shares * ₹ 10) To Securities Premium Reserves A/c (50,000 shares * ₹ 230) (Being allotment of 50,000 equity shares of ₹ 10 each issued at a premium of ₹ 230 per share) Dr. 1,20,00,000 5,00,000 1,15,00,000 12% Redeemable Preference Share Capital A/c Dr. (10,000 shares * ₹ 1,000) Premium on Redemption of Preference Share Capital A/c Dr. (10,000 shares * 20% of ₹ 1,000) To 12% Preference Shareholders A/c (Being amount due on redemption of preference shares) Dr. Dr. 1,00,00,000 20,00,000 1,20,00,000 Securities Premium Reserves A/c Dr. To Premium on Redemption of Preference Share Capital A/c (Being application of securities premium account to write off premium on redemption of preference shares) Dr. 20,00,000 20,00,000 12% Preference Shareholders A/c Dr. To Bank A/c (Being amount paid to 12% preference shareholders) Dr. 1,20,00,000 1,20,00,000