The following balances are obtained from the Balance Sheet of Pimo Ltd. as on 31 st March, 2018: (1) Shareholders' funds : (in lakh) (a) Issued and subscribed share capital: 40,00,000 Equity Shares of ₹10 each fully paid

CS Executive · Corporate and Management Accounting · PYQS · December 2018
The following balances are obtained from the Balance Sheet of Pimo Ltd. as on 31 st March, 2018: (1) Shareholders' funds : (in lakh) (a) Issued and subscribed share capital: 40,00,000 Equity Shares of ₹10 each fully paid 400 2,00,000, 10% Preference Shares of ₹100 each fully paid 200 (b) Reserves and Surplus : Capital Reserve 15 Securities Premium 75 General Reserve 125 (2) Non-current Investment 20 (3) Cash and Cash Equivalents 85 On 1 st April, 2018 the shareholders of the company have approved the scheme of buy-back of equity shares as under: (a) 10% of the equity shares would be bought back at ₹25 per share. (b) Investment would be sold for ₹35 lakh. (c) Premium on buy-back of shares should be met from securities premium account. Pass necessary journal entries to record the above transactions.

Answer & Explanation:

Journal Entries in the Books of Pimo Ltd. Particulars Debit (₹) Credit (₹) 1. Bank A/c Dr. 35,00,000 To Investment A/c 35,00,000 (Being investment sold) 2. Investment A/c Dr. 15,00,000 To Statement of Profit & Loss A/c 15,00,000 (Being profit on sale of investment transferred) 3. Equity Share Capital A/c Dr. 40,00,000 Securities Premium A/c Dr. 60,00,000 To Equity Shareholders A/c 1,00,00,000 (Being amount payable on buyback of 10% equity shares transferred) 4. General Reserve A/c Dr. 40,00,000 To Capital Redemption Reserve A/c 40,00,000 (Being amount equal to face value of shares buy back transferred to CRR) 5. Equity Shareholders A/c Dr. 1,00,00,000 To Bank A/c 1,00,00,000 (Being amount paid on buy back)

Topics: Corporate Accounting

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