additional info..b contigent liability... RM 3 million
7.4 the following is the trial balance Bhd found self in financial difficulty and decided to reorgies after extracted from its books as at 30 June 26 RM OOO 400.000 100,000 200,000 Credits Ordinary shares 6% cumulative preference shares 8% debentures Accumulated depreciation Buildings Equipment Trade payables Loans from directors Bank 170,000 22,300 80,000 100,000 82,700 1,155,000 Debits Land Buildings (at cost) Equipment (at cost) Intangibles Inventories Trade receivables Accumulated losses 150,000 500,000 130,000 30,000 80,000 65,000 200,000 1,155,000 Notes a. The issued share capital is made up of 400 milion ordinary shares, each fully paid up, and 100 milion 6 percent cumulative preference shares b. Preference dividends are in arrears for two years. C. There is a contingent liability of RM4 million The scheme agreed to by all parties and sanctioned by the court is as follows: Each ordinary share is to be converted into one fully paid ordinary share of 25 sen and the existing ordinary shareholders are to subscribe for one ordinary share for every one held at 35 sen per share payable in cash. The 6 percent cumulative preference shares are to be cancelled and in return the preference shareholders are to receive one 7 percent preference share of RM1 each and two 25 sen ordinary shares for every two 6 percent Cumulative preference shares held. The preference shareholders agreed to waive 50 percent of the preference dividend in arrears and accept ordinary shares of 25 sen for the balance of the preference dividends in arrears The directors agreed to convert their loans to 5 percent debentures of nominal value RM100 milion The accumulated losses, intangibles, bad debts of RM5,000,000 and inventories of RM10,000,000 are 1 be written off The following values are to be adopted: RM 000 170,000 Land 300,000 Building 45,000 Equipment 254 Chapter 7 any to the amount Additional information: a. Cost of reorganisation amounted to RM1.3 million. b. Contingent liability materialised and the insurance company indemnified the company to the an million Required: 1 Discuss the loss borne by each of the stakeholders. ii Journalise the above transactions ill. Prepare the statement of financial position of Richard Bhd immediately after the reconstruction 7.4 the following is the trial balance Bhd found self in financial difficulty and decided to reorgies after extracted from its books as at 30 June 26 RM OOO 400.000 100,000 200,000 Credits Ordinary shares 6% cumulative preference shares 8% debentures Accumulated depreciation Buildings Equipment Trade payables Loans from directors Bank 170,000 22,300 80,000 100,000 82,700 1,155,000 Debits Land Buildings (at cost) Equipment (at cost) Intangibles Inventories Trade receivables Accumulated losses 150,000 500,000 130,000 30,000 80,000 65,000 200,000 1,155,000 Notes a. The issued share capital is made up of 400 milion ordinary shares, each fully paid up, and 100 milion 6 percent cumulative preference shares b. Preference dividends are in arrears for two years. C. There is a contingent liability of RM4 million The scheme agreed to by all parties and sanctioned by the court is as follows: Each ordinary share is to be converted into one fully paid ordinary share of 25 sen and the existing ordinary shareholders are to subscribe for one ordinary share for every one held at 35 sen per share payable in cash. The 6 percent cumulative preference shares are to be cancelled and in return the preference shareholders are to receive one 7 percent preference share of RM1 each and two 25 sen ordinary shares for every two 6 percent Cumulative preference shares held. The preference shareholders agreed to waive 50 percent of the preference dividend in arrears and accept ordinary shares of 25 sen for the balance of the preference dividends in arrears The directors agreed to convert their loans to 5 percent debentures of nominal value RM100 milion The accumulated losses, intangibles, bad debts of RM5,000,000 and inventories of RM10,000,000 are 1 be written off The following values are to be adopted: RM 000 170,000 Land 300,000 Building 45,000 Equipment 254 Chapter 7 any to the amount Additional information: a. Cost of reorganisation amounted to RM1.3 million. b. Contingent liability materialised and the insurance company indemnified the company to the an million Required: 1 Discuss the loss borne by each of the stakeholders. ii Journalise the above transactions ill. Prepare the statement of financial position of Richard Bhd immediately after the reconstruction
