COURSE: DIPLOMA IN ACCOUNTING

SUBJECT: FINANCIAL ACCOUNTING & REPORTING V

I NEED ANSWER FOR ALL

CR Berhad engages in the research, design, and development of electronic end-products and sub-systems for the communication, computer, and consumer electronics industries. It operates through the following segments: research, design, development, sales, manufacturing and investment holding. The research, design, development, and sales segment involves electronic end products and subsystems for the communication, computer and consumer electronics industries and service sales. The manufacturing segment which contributes majority revenue offers electronic end products, sub-systems, wire-harness, and electronic related accessories. The investment holding segment consists of dormant companies. Due to the recent pandemic, its manufacturing warehouses were forced to close. The company incurred heavy losses and unable to pay dividends to its shareholders. To save the company, the directors decided for the company to be reconstructed. The statement of financial position of CR Berhad as at 31st December XX is as follows. A capital reduction scheme duly approved by the court was set out as follows: 1) The ordinary shares are to be reduced to RM3.00 per share and the preference shares reduced to RM0.50 each. 2) Part of the cash raised by the share issue in 1) is to be used to settle trade payables and accruals, and preference dividend payable. 3) The accumulated losses and all intangible assets are to be written off. 4) The fair value of the investment in subsidiary companies is RM2,435,000. Required: i. Prepare the journal entries to record the capital reduction. ii. Prepare a statement of the financial position of CR Berhad immediately after the capital reduction