On 31 March 2016, the following was the statement of financial position of Greenmantle Ltd:

The following scheme of capital reduction was sanctioned by the Court and agreed by the shareholders:
(a) Preference shares were to be reduced to 80p each.
(b) Ordinary shares were to be reduced to 25p each.
(c) The capital reserve was to be eliminated.
(d) The reduced shares of both classes were to be consolidated into new ordinary shares of £1 each.
(e) An issue of £960,000 5% loan notes at par was to be made to provide fresh working capital.
(f) The sum written-off the issued capital of the company and the capital reserve to be used to write off the debit balance of retained profit and to reduce non-current assets by the following amounts:

(g) The bank overdraft was to be paid off out of the proceeds of the loan notes which were duly issued and paid in full.
A further resolution was passed to reduce the authorised capital of the company to 5,600,000 ordinary shares of £1 each.

Required:
Prepare journal entries (cash transactions to be journalised) to give effect to the above scheme and draw up the statement of financial position of the company after completion of the scheme.

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Non-current assets Goodwill and trade marks as valued Plant and machinery (at cost less depreciation) Furniture and fittings (at cost less depreciation) Current assets Inventory Sundry accounts receivable Cash Total assets Current liabilities Sundry accounts payable Bank overdraft Net assets Statement of Financial Position Equity Authorised capital 640,000 6% preference shares of £1 each 9.6 million ordinary shares of 50p each Issued and fully paid capital 320,000 6% preference shares of £1 each 5.6 million ordinary shares of 50p each Capital reserve Less: Retained profits £ 896,000 1,024,000 26,880 608,640 238,720 960 106,240 142,080 640,000 4,800,000 5,440,000 192,000 (765,120) £ 1,946,880 848,320 2,795,200 (248,320) 2,546,880 320,000 2,800,000 3,120,000 (573,120) 2,546,880