Reference no: EM13925098

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:

	Sh.		Sh.
Capital and liabilities:		Assets:
		Fixed assets	6,000,000
500,000 equity shares of Sh.10 each		Investments	2,000,000
Sh.8 per share called up and paid up	4,000,000	Stock	2,000,000
		Sundry debtors	2,000,000
		Cash at bank	3,000,000
500,000 13% redeemable preferences shares of Sh.100 each	500,000
Share premium	980,000
General reserve	900,000
Profit and loss account balance	1,120,000
Sundry creditors	3,000,000		_________
	15,000,000		15,000,000

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.