Redeemable preference shares of Rs. 2,00,000 are redeemed at par for which purpose fresh equity shares are issued for Rs. 80,000 at par, The amount be transferred to Capital Redemption Reserve Account would be:

The correct answer is: B. Rs. 1,20,000

Explanation:

The amount to be transferred to Capital Redemption Reserve Account is the difference between the amount received on redemption of preference shares and the amount paid for fresh equity shares. In this case, the amount received on redemption of preference shares is Rs. 2,00,000 and the amount paid for fresh equity shares is Rs. 80,000. Therefore, the amount to be transferred to Capital Redemption Reserve Account is Rs. 2,00,000 – Rs. 80,000 = Rs. 1,20,000.

Option A is incorrect because it is the amount received on redemption of preference shares. Option C is incorrect because it is the total amount of preference shares redeemed. Option D is incorrect because it is the amount paid for fresh equity shares.