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June 2005 p3 A-level Accounting MCQ

D

dasani

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(9) A company’s balance sheet shows:
$000
ordinary shares of $0.50 1200
redeemable preference shares of $1.00 each 400
share premium account 300
retained profit 900
Total 2800
The preference shares were issued originally at par and are being redeemed at a premium of
$0.30.
What will be the effect of the redemption on the retained profit of the company?

Help me please.
 
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