In the context of Section 60 of the Companies Act (Cap 486 of the Laws of Kenya). Identify any four conditions that must be met before a company's performance shares can be redeemed.
The balance sheet of Biashara Ltd., as at 28 February 2005 was as follows:
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Sh.
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Sh.
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Capital and liabilities:
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Assets:
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Fixed assets
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6,000,000
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500,000 equity shares of Sh.10 each
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Investments
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2,000,000
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Sh.8 per share called up and paid up
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4,000,000
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Stock
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2,000,000
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|
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Sundry debtors
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2,000,000
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|
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Cash at bank
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3,000,000
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500,000 13% redeemable preferences shares of Sh.100 each
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500,000
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Share premium
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980,000
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|
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General reserve
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900,000
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|
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Profit and loss account balance
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1,120,000
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|
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Sundry creditors
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3,000,000
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_________
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15,000,000
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15,000,000
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Additional information:
The company resolved:
To convert the partly paid up equity shares into fully paid up shares on 1 March 2005 without requiring the shareholders to pay for the same.
To redeem the preference shares on 31 March 2005 at a premium of 7.5% and for his purpose to issue 30,000 12% preference shares of
Sh.100 each at a premium of 10% payable in full application.
For the purpose of redemption, the company sold fixed assets valued at Sh.3,000,000 for Sh.3,825,000 on 31 March 2005. On the same date the company sold all the investments for Sh.2,600,000.
On 30 April 2005 all payments were made on redemption except to holders of 2,000 shares who could not be traced.
On 31 May 2005, the directors issued fully paid bonus shares to he shareholders existing as at that date at the rate of 3 shares for every 5 held at a premium of 5%.
Required:
The necessary journal entries in the books of Biashara Ltd. To record the above transactions.