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Ty Baf Q 17 Solution

The company bought back 10,000 shares of Rs. 100 each at Rs. 152 per share, utilizing funds from general reserve, profit and loss, and security premium accounts. The premium on buyback of Rs. 52 per share was transferred from general reserve and security premium to the premium on buyback account. An overdraft of Rs. 11,20,000 was used to fund the buyback since the total bank balance was Rs. 4,00,000 but the amount required for buyback was Rs. 15,20,000. Finally, payment was made to equity shareholders from the cash/bank account.

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43 views1 page

Ty Baf Q 17 Solution

The company bought back 10,000 shares of Rs. 100 each at Rs. 152 per share, utilizing funds from general reserve, profit and loss, and security premium accounts. The premium on buyback of Rs. 52 per share was transferred from general reserve and security premium to the premium on buyback account. An overdraft of Rs. 11,20,000 was used to fund the buyback since the total bank balance was Rs. 4,00,000 but the amount required for buyback was Rs. 15,20,000. Finally, payment was made to equity shareholders from the cash/bank account.

Uploaded by

GANESH
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Q.

17
You can buy back 10,000 shares of Rs. 100 each at Rs. 152 per share.
Date Particulars Debit Rs. Credit Rs
1 Due: General Reserve 8,00,000
Equity Share Capital A/c (10,000*100) Dr. 10,00,000 Profit & Loss 4,00,000
Premium on Buyback A/c (10,000*52) Dr. 5,20,000 Security Premium 3,20,000
To Equity Shareholder A/c 15,20,000
No of Shares 10,000
2.a. Arrangement: (Premium): Buyback price 152
Security Premium A/c Dr. 3,20,000 Face Value 100
General Reserve A/c Dr. 2,00,000 Premiume 52 Loss Dr.
To Premium on buyback A/c 5,20,000
Premium Shares
2.b. Arrangement: (CRR): 5,20,000 10,00,000
General Reserve A/c Dr. 6,00,000 Security Premium 3,20,000 GR 6,00,000
Profit & Loss A/c Dr. 4,00,000 General Reserve 2,00,000 P&L 4,00,000
To CRR A/c 10,00,000
Overdraft:
3 Bank Overdraft used for shortage of fund: Bank balance 4,00,000
Cash/Bank A/c Dr. 11,20,000 Received Or paid Nil
To Bank Overdraft A/c 11,20,000 Total Bank Balance 4,00,000
Required for Buyback -15,20,000
4 Payment: Shortage -11,20,000
Equity Shareholder A/c Dr. 15,20,000
To Cash/bank A/c 15,20,000

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