Paper 2 · Company accounts - share capital and redemption
Green Limited had 60,000 4% redeemable preference shares of $1 each. On 30 June 2015 it redeemed 25% of these preference shares at a premium of 10%. What amount in total was paid to redeem the shares?
A$15,000
B$15,750
C$16,500
D$19,800
Explanation: Shares redeemed = 25% × 60,000 = 15,000 shares. Redemption price per share = 1.10. Total paid = 15,000 × 16,500 (not the par value alone, a smaller 5% premium, or a redemption of the wrong proportion of shares).
Derived from ZIMSEC Accounting Paper 2, June 2018, Q2
