journal entry

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Kanika Garg (Querist)
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07 October 2009 What is the journal entry if preference shares worth Rs. 100 is issued at a premium of Rs. 5 and redeemable at a premium of Rs. 3?
Entry is required at the time of issue of shares.

C.A.Harish Singh

C.A.Harish Singh (Expert)
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13 October 2009 At the time of issue of share

bank a/c Dr. 105
To Pref. Share Capital 100
To Security Premium 5

At the time of Redemption

Free Reserve a/c Dr.103
To Capital Redemption Reserve 103

Pref. Share Capital a/c Dr. 100
Premium on redem. on p.c. capital Dr.3
To Pref.Share Holder a/c 103

Pref. Share Holder A/c Dr.103
To Bank 103