Crave Cottage industry Limited has been in successful business for the past ten years .

following the retirement of the first managing director who also doubled as the majority shareholder, poor management

has plunged the company into losses which is potentially eroding the capital of the of the company.

The statement of Financial Position of the company as the 31st December 2015 is given below:

1). furniture and Fittings -34,000,000

2). Motor vehicle - 55,500,000

3). Goodwill - 39,000,000

4).Land and Building - 23,400,000

5). Inventories - 15,300,000

6). Trade receivables - 10,650,000

7). Cash at hand - 750,000

8.) Accounts payables - 27,000,000

9). Bank overdraft - 45,750,000

10). 18% Debenture - 30,000,000

11). stated capital - 97,500,000

12).capital surplus - 36,000,000

13). income surplus - 57,150,000

Additional information:

1).The realizable values of the assets are as follows:

Furniture and Fittings - 27,000,000

Motor vehicle - 67,500,000

Land and Building - 26,250,000

Inventories - 10,950,000

Trade receivables - 7,500,000

2). The stated capital of the company is made up as follows:

*2,000,000 ordinary shares of no par value = GHS67,500,000

*500,000 15% cumulative preference shares of no par value = GHS30,000,000

3). The cost of winding up is estimated at GHS21,300,000

4). The bank overdraft and 18% Debenture are secured by a floating charge on assets

5).The preference dividends and interest on debenture are two (2) years in arrears. However, no provision has been made for those in the financial statement.

6).The ordinary shareholders have decided to inject GHS60,000,000 in consideration for a new share if the capital reconstruction scheme is accepted.

7).Although, it is the company's policy to amortize intangible assets over five years, the Board of Directors nonetheless have decided to maintain the Goodwill indefinitely in the books due to the persistent losses in contravention of the company's policy. Goodwill has been outstanding since 2009. The current financial state of the company negates the value and the existence of the goodwill.

8).The preference shareholders have indicated their willingness to bear any deficit from the reconstruction in proportion to their interest in the stated capital. In return, their stake would be converted into equity and would be permitted to make nomination to key management position including chairing the board for the first five years. If these proposals are accepted, the preference shareholders will contribute further equity of GHS60,000,000. They have also agreed to waive 50% of the arrears of dividend and convert and convert the rest into equity.

9). Any arrears of preference dividends are to form a first charge upon any surplus on winding up.

10). The original ordinary shareholders had decided to waive any dividend due to them during the first two (2) years in order to put the company on sound financial grounds.

11).The company is expected to improve in cash flow position and commence dividend payment if the additional capital of GHS120,000,000 is introduced.

REQUIRED:

a). Calculate the amount available if Crave Cottage industry Limited is liquidated and its distribution.

b).Calculate the maximum possible loss of Crave Cottage Industry Limited and its allocation to preference share capital and Ordinary share capital

c).Calculate the Bank/cash balance of Crave Cottage industry Limited after the re-organization.

d). Calculate the new stated capital for the company after the reorganization.

e).Prepare a statement of Financial Position of Crave Cottage industry Limited showing the position immediately after the scheme has been put in place.