Right Shares – TaxDose.com

Right Shares :

(1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue
of further shares, such shares shall be offered –

(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely: –

(i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause (i) shall contain a statement of this right;

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company;

(b) to employees under a scheme of employees’ stock option, subject to special resolution passed by company and subject to such conditions as may be prescribed; or

(c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed.

(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be despatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the
opening of the issue.

(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company:

Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.

ILLUSTRATION 1

B & Co. Ltd issued a prospectus offering 2,00,000 shares of Rs.10 each on the following terms :
On Application Rs.1 per share
On Allotment Rs.3 per share (including premium of Rs. 2)
On First Call (three months after allotment) Rs.4 per share
On Second Call (three months after first call) Rs.4 per share
Subscriptions were received for 3,17,000 shares on 23rd April and the allotment was made on 30th April as under :

Shares Alloted

i. Allotment in full (two applicants paid in full on allotment 38,000
In respect of 4,000 shares each)

ii. Allotment of two-thirds of shares applied for 1,60,000

iii. Allotment of one-fourth of shares applied for 2,000

Cash amounting to Rs. 31,000 (being application money received with applications for 31,000 shares upon which no allotments were made) was returned to the applicants on 5th May. The amounts due were received on the due dates with the exception of the final call on 100 shares. These Shares were forfeited on 15th November and reissued to Varun on the 16th November for payment of Rs.9 per share. The company paid the interest due on calls-in-Advance on 31st October in cash. Show the journal and Cash Book Entries and draw a Balance sheet of the Company giving effect to the above transactions.

SOLUTION:

JOURNAL

*Date*	*Particulars*	*Amount(Dr.)*	*Amount(Cr.)*
April 30	Share Application Account Dr. To Share Capital Account To Share Allotment Account (Being application money transferred to Share Capital Account on allotment of 2,00,000 shares and excess application money on 86,000 shares @Rs. 1 per share utilized towards allotment)	2,86,000	2,00,000 80,000
April 30	Share Allotment Account Dr. To Share Capital Account To Securities Premium Account (Being allotment money due on 2,00,000 shares @ Rs.3 per share including Rs.2 per share)	6,00,000	2,00,000 4,00,000
Oct 31	Share first Call Account Dr. To Share Capital Account (Being amount due in respect of first call on 2,00,000 shares @ Rs.4 per share)	8,00,000	8,00,000
Oct 31	Calls in Advance Account Dr. To Share Second and Final Call Account (Being second call money received on 8,000 shares @ Rs. 4 per share received in advance is debited to the Calls in Advance Account)	32,000	32,000
Nov. 15	Share Capital Account Dr. To Share Second and final Call Account To Share Forfeited Account (Being forfeiture of 100 shares for non-payment of second and final call)	1,000	400 600
Nov. 16	Share Forfeited Account Dr. To Share Capital Account To Capital Reserve Account (Being discount allowed on re-issue of 100 forfeited shares @ Rs. 1 per share and profit on re-issue transferred to Capital Reserve Account)	600	100 500

CASH BOOK

Date	Particulars	Amount	Date	Particulars	Amount
April 23	To Share Application Account	3,17,000	May 5	By Share Application Account	31,000
April 30	To Share Allotment Account	5,14,000	Oct 31	By Interest on Calls-in-Advance	1,440
April 30	To Calls-In-Advance Accounts	64,000		By Balance c/d	23,99,060
July 31	To Share First Call Account	7,68,000
Oct.31	To Share Second & Final Call Account	7,67,600
Nov.16	To Share Capital A/c	900
Nov.16	To Share Capital A/c
	To Balance b/d	24,31,500			24,31,500
	To Balance b/d	23,99,060

Interest on Calls-in-Advance has been calculated as follows: Amount (Rs.)

On first call money from April 30 to July 31 @ 6% p.a. for 3 months (Rs.32,000 * 6/100*3/12) 480
On second and final call money from April 30 to October 31@ 6% p.a. 960
For 6 months (Rs.32,000 * 6/100 * 6/12) 1,440

Balance Sheet of B & Co. Ltd.

*Particulars*	*Amount*
Liabilities:
Share Capital:
Issued, Subscribed and Paid Up:
2,00,000 shares of Rs. 10 each fully paid up 20,00,000	20,00,000
Reserves and Surplus:	500
Capital Reserve 500	4,00,000
Securities Premium Account	24,00,500
Assets:
Current Assets:
Cash at Bank
Interest on Calls in Advance Account (Pending adjustment)	23,99,060
	1,440
	24,00,500

Working notes:

ANALYSIS OF APPLICATION MONEY RECIEVED

*Shares Applied*	*Shares Allotted*	*Amount Received @ Rs.1 per share*	*Application Money*	*Adjusted as Allotment Money*	*Money Returned to Applicants*
		*Rs.*	*Rs.*	*Rs.*	*Rs.*
38,000	38,000	38,000	38,000	–	–
2,40,000(160000 * 3/2)	1,60,000	2,40,000	1,60,000	80,000	–
8,000(2,000 * 4/1)	2,000	8,000	2,000	6,000 (2,000 * 3)	–
31,000	Nil	31,000	Nil	–	31,000
3,17,000	2,00,000	3,17,000	2,00,000	86,000	31,000

lLLUSTRATION 2

Pooja Ltd. Invited applications for 80,000 shares of Rs.10 each at a premium of Rs. 2.50 per share payable as follows:

On application Rs3

On allotment Rs. 4.50 (including premium)

On first call Rs. 2

On second call Rs. 3

Applications were received for 1,70,000 shares, out of which applications for 10,000 shares were rejected and money refunded to them. The allotment was made pro-rata to the remaining applicants. Money over-paid on applications was used against allotment money due.

Anil to whom 2,000 shares were allotted failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.

Sunil, the holder of 1,200 shares failed to pay the two calls, and his shares were forfeited after the final call. Of
the forfeited shares 2,400 shares were reissued at the rate of Rs.8 per share credited as fully paid, including the
whole of Anil’s forfeited shares. Show necessary Journal entries.

SOLUTION:

In the Books of Pooja Ltd.
JOURNAL ENTERIES


Bank A/c Dr. To Share Capital A/c (Being receipt of application money on 1,70,000 shares @ Rs. 3 per share )	5,10,000
		5,10,000
Share Application A/c Dr. To Share Capital A/c To Share Allotment A/c To Bank A/c (Being application money on 80,000 shares @ Rs.3 each transferred to Share Capital A/c, surplus application money of 80,000 shares transferred to Share Allotment A/c and application money of 10,000 shares refunded to the unsuccessful applicants)	5,10,000
		2,40,000 2,40,000
		30,000

Share Allotment A/c Dr. To Share Capital A/c To Securities Premium A/c (Being Share allotment money due on 80,000 shares @ Rs. 4.50 (including premium of Rs. 2.50) per share )	3,60,000	1,60,000 2,00,000
Bank A/c Dr.	1,17,000
To Share Allotment A/c (W.N 1)		1,17,000
(Being balance of securities premium received @ Rs. 1.50 per share on 78,000 shares; Rs. 3 per share already received as surplus application money. Surplus application money @ Rs.2 will be first utilized as capital and balance of Rs. 1 per share adjusted as premium)

Share First Call A/c Dr.	1,60,000
To Share Capital A/c		1,60,000
(Being first call due on 80,000 shares @ Rs.2 per share)

Bank A/c Dr.	1,53,600
To Share First Call A/c		1,53,600
(Being 1st call money received on shares except 3,200 shares @ Rs. 2 per share)
Share Capital A/c Dr.	14,000
Securities Premium A/c Dr.	3,000
To Share Allotment A/c		3,000
To Share First Call A/c		4,000
To Share Forfeited A/c		10,000
(Being forfeiture of 2,000 shares for non- payment of first call, premium @ Rs.1.50 per share cancelled which was not received on allotment )
Share Second and Final Call A/c Dr.	2,34,000
To Share Capital A/c		2,34,000
(Being final call due on 78,000 shares @ Rs. 3 per share )

Bank A/c Dr.	2,30,400
To Share Second and Final Call A/c		2,30,400
(Being second call money received on 76,800 shares @ Rs. 3 per share )

Share Capital A/c Dr. To Share First Call A/c To Share Second and Final Call A/c To Share Forfeited A/c(Being forfeiture of 1,200 shares for non-payment of two calls)	12,000	2,400 3,600 6,000
Bank A/c Dr.	19,200
Shares Forfeiture A/c Dr.	7,800
To Share Capital A/c		24,000
To Share Premium A/c		3,000
(Being 2,400 shares reissued @ Rs. 8 per share ; premium @ Rs. 1.50 per share on

Shares forfeited A/c Dr. (Rs.10,000 + Rs.6,000/1,200 * 400 — Rs.7,800)	4,200
To Capital Reserve A/c		4,200

(Being unused balance of shares forfeited account in respect of 2,400 shares transferred toCapital Reserve A/c)

Amount received on allotment is calculated as follows:		Amount (Rs.)
Amount due on allotment of 80,000 shares @ Rs. 4.50		3,60,000
Less: Application money on excess 80,000 shares adjusted on allotment @ Rs. 3 (Rs. 2 as capital and Rs. 1 per share as premium)		2,40,000

		1,20,000
Less: Amount of allotment not received on 2,000 shares:
Amount due on allotment of 2,000 shares @ Rs. 4.50 per share	Rs. 9,000
Less: Already received with application 2,000 * Rs. 3 (Applied for 4,000shares and allotted 2,000 shares)	Rs.6,000
		3,000
Amount received on allotment		1,17,000

NOTE: If shares issued at a premium on which securities premium has not been received till forfeited shares are reissued, Securities Premium Account will be credited with the amount of the securities premium not received till forfeiture in respect of reissued shares and the amount to be debited to Forfeited Shares Account will be calculated after taking into consideration this credit.

Divya Paints Ltd
BALANCE SHEET
AS AT 31st March, 2014

I. EQUITIES AND LIABILITIES 1. Shareholders’ funds		Z
(a) Share Capital	1	30,00,000
(b) Reserve & Surplus	2	12,05,000
2. Non-Current Liability
Long term borrowings	3	14,00,000
3. Current Liability
Trade payables		4,60,000
TOTAL		60,65,000
II. ASSETS
1. Non-current assets (a) Fixed Assets (i) Tangible fixed assets	4	33,30,000
(b) Non Current Investment		3,70,000
2. Current Assets
Inventories	12,00,000
Trade receivables	5,90,000
Cash and cash equivalents Balance	5 75 000	23,65,000
TOTAL
TOTAL		60,65,000
Notes
1. Share Capital
Authorized Share Capital
Issued, Subscribed Called Up And Paid-Up Share Capital:-
3,00,000 shares of Z 10 each fully paid-up		30,00,000
2. Reserve and Surplus
Securities Premium	7,00,000
General Reserve	5 05 000	12,05,000
3. Long term borrowings
14% Debentures		14,00,000
4. Tangible Fixed assets
Land and building	6,30,000
Plant and machinery	23,50,000
Furniture and fitting	3 50 000	33,30,000
Furniture and fitting

On 1st April, 2014 the shareholders of the company have approved the scheme of buy-back of equity shares as under:
(i) 15% of the equity shares would be bought back at ` 18.
(ii) General reserve balance may be utilised for this purpose.
(iii) Premium paid on buy back of shares should be met from securities premium account.
(iv) Investments would be sold for ` 4,00,000.
Pass journal entries to record the above transactions and prepare the balance sheet of the company immediately after the buy-back of shares.

Solution:

Divya Paints Ltd.

Journal Entries

Particulars

Dr. (`Rs.)

Cr.(Rs.)

Bank Dr.

To Investments

To Profit and Loss A/c

(Sale of investments, the profit being transferred to profit and loss account as per shareholder’s special resolution)_______————————_

400

370

Shareholders Dr.

To Bank

(Purchase of 45,000 of own shares @ ` 18 each)

810

Equity Share Capital A/c Dr.

Securities Premium A/c

To Shareholders Dr.

(Cancellation of 45,000 equity shares bought back, and securities premium utilised as per shareholders’ special resolution)_________—

450

360

810

General Reserve Dr.

To Capital Redemption Reserve A/c

(Transfer of general reserve utilised to the extent of nominal value of shares bought back)

450

Divya Paints Ltd
BALANCE SHEET (After Buy-back)
AS AT 1st April, 2014

I. EQUITIES AND LIABILITIES		Rs.
1. Shareholders’ funds
(a) Share Capital 1		25,50,000
(b) Reserve & Surplus 2		8,75,000
2. Non Current Liability
Long term borrowings 3
3. Current Liability
Trade payables		4,60,000
TOTAL		52,85,000
II. ASSETS
1. Non-current assets
(a) Fixed assets
(i) Tangible fixed assets 4		33,30,000
2. Current Assets
Stock	12,00,000
Sundry debtors	5,90,000
Cash and Cash equivalents	1,65,000
		19,55,000
Total Notes		52,85,000
1. Share Capital
Authorized Share Capital		……………….
Issued, Subscribed Called Up And Paid-Up Share Capital 2,55,000 shares of ` 10 each fully paid-up		25,50,000
2. Reserve and Surplus
Securities Premium	1,45,000
General Reserve	2,50,000
Capital Redemption Reserve	4,50,000
Profit and Loss Account	30,000
		8,75,000
3. Long term borrowings
14% Debentures	14, 00,000
4. Tangible Fixed assets
Land and building	6,30,000
Plant and machinery	23,50,000
Furniture and fitting	3,50,000
		33,30,000

Note: The debt-equity ratio of the company after buy-back of shares:

________Debt___________

Debt equity ratio = Equity (Capital and free reserves)

= ____1400+460____ = 1,860 = 0.625 : 1

2,550 +250+ 145+ 30 2,975

The debt equity ratio is within the limit.

Powerlink Ltd

BALANCE SHEET
AS ON 31st March, 2014

I. EQUITY AND LIABILITIES 1. Shareholders ‘funds’		Z
(a) Share Capital 1		50,00,000
(b)Reserve & Surplus 2		15,65,000
2. Non-current liabilities
Long term borrowings 3		38,25,000
3. Current Liabilities
Trade payables	7,42,000
Short term provisions 4	1,25,000	8,67,000
TOTAL		1,12,57,000
II. ASSETS
1. Non-current assets (a) Fixed Assets	66,00,000
(b)Non-Current Investments	18,00,000	84,00,000
2. Current Assets
Inventories	11,87,000
Trade receivables	9,60,000
Cash and Cash equivalent	7,10,000	28,57,000
TOTAL		1,12,57,000
TOTAL

Notes 1.Share Capital Authorized Share Capital Issued, Subscribed Called Up And Paid-Up Share Capital
5,00,000 shares of Z 10 each fully paid-up		50,00,000
2.Reserve and surplus
Securities Premium	5,40,000
General Reserve	6,50,000
Profit and Loss Account	375,000	15,65,000
3.Long term borrowing
12% Debentures	25,00,000
Term Loan	13,25,000	38,25,000
4.Short term provisions
Provision for taxation		1,25,000

The shareholders adopted the resolution on the date of the abovementioned balance sheet to:

buy back 20% of the paid-up capital @ Z 15 each.
issue 13% debentures of Z 5,00,000 at a premium of 10% to finance the buy back of shares.
maintain a balance of Z 3,00,000 in general reserve account, and
sell investments worth ! 8,00,000 for Z 6,50,000.

Pass necessary journal entries to record the above transactions and prepare the balance sheet immediately after the buy back.

Solution:

Powerlink Limited
Journal Entries

*Particulars*	*Dr. (7)*	Cr.(!)
Bank Dr.	6,50,000
Profit and Loss Account Dr.	1,50,000
To Investments A/c		8,00,000
(Sale of investments worth ! 8,00,000 the loss is transferred to profit and loss account)
Bank Dr.	5,50,000
To 13% Debentures A/c		5,00,000
To Securities Premium A/c		50,000
(Issue of debentures at a premium of 10% to finance the buy-back of shares)

Shareholders A/c Dr

To Bank

(Buy-back of 1,00,00 equity shares @ ` 15 each)

15,00,000

Equity Share Capital Dr. Equity Share Capital Dr.

Securities Premium A/c Dr.

To Shareholders A/c

(Cancellation of re-purchased shares and utilisation of securities premium for the payment of premium amount on buy-back of shares)

10,00,000

5,00,000

15,00,000

General Reserve A/c Dr.

Profit and Loss A/c Dr.

To Capital Redemption Reserve A/c

(Utilisation of general reserve and profit and loss account to meet buy-back requirements)

3,50,000

1,50,000

5,00,000

Powerlink Ltd
BALANCE SHEET
AS ON 31st March, 2014

I. EQUITY AND LIABILITIES 1. Shareholders ‘funds		Z
(a) Share Capital 1		40,00,000
(b)Reserve & Surplus 2		9,65,000
2. Non-current liabilities
Long term borrowings 3		43,25,000
3. Current Liabilities
Trade payables	7,42,000
Short term provisions 4	1 25 000	8,67,000
TOTAL		1.01.57.000
II. ASSETS
1. Non-current assets (a) Fixed Assets	66,00,000
(b)Non-Current Investments	10,00,000	76,00,000
2. Current Assets
Inventories	11,87,000
Trade receivables	9,60,000

Cash and Cash equivalent	4 10 000	25,57,000

TOTAL		1.01.57.000

Notes
1.Share Capital
Authorized Share Capital
Issued, Subscribed Called Up And Paid-Up Share Capital
4,00,000 shares of Z 10 each fully paid-up		40,00,000
2.Reserve and surplus
Capital Redemption Reserve	5,00,000
Securities Premium	90,000
General Reserve	3,00,000
Profit and Loss Account	75.000	9 65 000
3.Long term borrowing
12% Debentures	25,00,000
13% Debentures	5,00,000
Term Loan	13,25,000	43,25,000
4.Short term provisions
Provision for taxation		1,25,000

Note: It is assumed that securities premium has been utilised exclusively for the payment of premium on buy back of shares. Hence, as a matter of prudence, for the transfer of nominal value of shares bought back to Capital Redemption Reserve, the available balance in general reserve and profit and loss account is taken into account.

ILLUSTRATION 5

ABC Ltd. granted 1000 options on April 1, 2012 at Rs. 20 (nominal value Rs. 10 each) when the market price was Rs. 80, the vesting period was 2 ½ years. The maximum exercise period was one year. On May 1, 2013, 300 unvested options lapsed and 600 options were exercised. On 30th June, 2014 remaining 100 options lapsed at the end of exercise period. Pass necessary journal entries.

SOLUTION:

In the Books of ABC Ltd.
JOURNAL

Date

Particulars

Amount (Rs.)

2012 April 1

Deferred Employee Compensation Expense A/c Dr.

To Employee Stock Options Outstanding A/c

(Being grant of 1,000 options at a discount of Rs. 60,i.e., Rs. 80 — Rs.20)

60,000

2013 March 31

Employee Compensation Expense A/c Dr.

To Deferred Employee Compensation Expense A/c

(Being amortization of Deferred Compensation, i.e., Rs. 60,000 / 2 ½)

24,000

24,000

2013
March 31

Employee Compensation Expense A/c Dr.

To Deferred Employee Compensation Expense A/c

(Being amortization of Deferred Compensation, i.e., Rs. 60,000 / 2 ¹/2)

24,000

2013 March 31	Employee Stock Options Outstanding A/c Dr.	18,000
	To Employee Compensation Expense A/c		14,400
	*[(300 Rs.60) * 2/2.5]**
	To Deferred Employee Compensation Expense A/c	3,600
	*[(300 Rs.60) * 2/2.5]**
	(Being reversal of compensation accounting on lapse of 300 unvested options )

2014 March 31

Employee Compensation Expense A/c Dr.

8,400

To Deferred Employee Compensation Expense A/c

(Being amortization of Deferred Compensation)

8,400

2014	Bank A/c Dr.	12,000
June 30	Employee Stock Options Outstanding A/c	36,000
	*[Rs. 600 (Rs. 80 – Rs. 20)]**
	*To Equity Share Capital A/c (600 10)**		6,000
	*To Securities Premium A/c [Rs.600 (Rs. 80 – Rs. 10)]**		42,000
	(Being excise of 600 options at an excise price of Rs. 20 each and an accounting value of Rs. 60 each )

2014	Employee Stock Options Outstanding A/c Dr.	6,000
Oct. 1	To Employee Compensation Expense A/c		6,000
	(Being reversal of compensation accounting on lapse of 100 vested options at the end of the excise period *i.e., Rs.100 (Rs. 80 – Rs. 20) )**

ILLUSTRATION 6

Adarsh Ltd. furnishes the following summarized Balance Sheet as at 31st March, 2014:

	Amount(Rs.000)	Amount(Rs.000)
Liabilities
Share capital
Authorised capital		3000
Issued and Subscribed capital:
2,00,000 Equity shares of ` 10 each	2500
2,000, 10% Preference shares of Rs.100 each	200

(Issued two months back for the purpose of buy-back) Reserves and surplus:		2700
Capital Reserve	1,000
Revenue Reserve	3,000
Securities Premium	2,200
Profit and Loss account	3,500	9,700
Current liabilities and provisions		1,400
		1,38,000
Assets
Fixed assets		9,300
Investments		3,000
Current assets, loans and advances (including cash and bank balance)		1.500
		13.800

The company passed a resolution to buy- back 20% of its equity share capital @ Rs. 50 per share. For this
purpose, it sold all of its investment for Rs. 22,00,000.
You are required to pass necessary journal entries and prepare the Balance Sheet.

SOLUTION:

In the Books of Adarsh Ltd.
Journal Enteries

	*Particulars*	*Amount (Dr.)* *Amount (Cr)*
		In Rs.000
(i)	Bank Account Dr.	2,200
	Profit and Loss Account Dr.	800
	To Investment Account		3000
	(Being the investments sold at loss for the purpose of buy-back)
(ii)	Equity Share Capital account Dr.	500
	Premium payable on Buy-Back Account	2000
	To Equity Shares Buy-Back Account		2500
	(Being the amount due on buy- back)
(iii)	Securities premium Account Dr.	2000
	To Premium payable on buy-back Account		2000
	(Being the premium payable on buy-back adjusted against securities premium account)
(iv)	Revenue Reserve Account Dr.	300
	To Capital Redemption Reserve Account		300
	(Being the amount equal to nominal value of equity shares bought back out of free reserves transferred to capital redemption reserve account)

(v)

Equity shares buy-back Account Dr.

To Bank Account

(Being the payment made on buy-back)

2500

Balance Sheet of Adarsh Ltd. as on 1st April, 2014
(After buy back of shares)

*Particulars*			*Note no*	*Amount (in Rs.000)*
I.	Equity and Liabilities
	(1) Shareholder’s Funds
	(a) Share Capital		1	2,200
	(b) Reserves and Surplus		2	6,900
	(2) Current Liabilities			1,400
		Total		10,500
II.	Assets
	(1) Non-current assets
	(a) Fixed assets			9,300
	(2) Current assets			1,200
		Total		10,500

Notes to Accounts

Amount (,000)

1 Share Capital

Authorised capital: 3000

Issued and subscribed capital: 2000

2,00,000 Equity shares of ’10 each fully paid up 200

2,000 10% Preference shares of Rs. 100 each fully paid up

2 Reserves and Surplus

Capital Reserve 1000

Capital redemption reserve 300

Securities Premium 22,00

Less: Premium payable on Buy back of shares 20.00 2

Revenue reserve 30,00

Less: Transfer to Capital redemption reserve 3.00 2700

Profit and loss A/c 35,00

Less: Loss on investment 8.00 2700 6900

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