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Lingkup Bhd. had experienced trading difficulties, decided to reorganize its affairs. A scheme capital reduction was drawn up, a special resolution was passed and approval

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Lingkup Bhd. had experienced trading difficulties, decided to reorganize its affairs. A scheme capital reduction was drawn up, a special resolution was passed and approval of the court is obtained. The following is the trial balance as at 31" January 2021. RM Authorized capital 150,000 7% Preference shares at RM1 each 150,000 400,000 Ordinary shares at RM1 each 400.000 550,000 Issued and paid-up capital 100,000 7% Preference shares at RM1 each 300,000 Ordinary shares at RMI each Accumulated loss Trade payables 100,000 300,000 (160,000) 160,000 400,000 Premises Plant and machinery Preliminary expenses Inventories Trade receivables Bank 80,000 190,000 30,000 40,000 30,000 30.000 400,000 Notes: 1. The 7% preference shares dividend are two years in arrears. 2. There is contingent liabilities for damages of RM20,000. The scheme agreed by all parties and sanctioned by the court is as follows: 1. The ordinary shares are to be written down by RM0.75 per share and then converted into new ordinary shares of RM1 per shares fully paid. b. The preference shareholders are to receive 50,000 ordinary shares of RM1 per shares, fully paid at par in exchange for their 7% Preference shares. c. In consideration to the arrears of preference dividend, the preference shareholders agreed to accept one new ordinary shares of RM1 per share for every one RMI preference dividends in arrears. d. The trade payables have agreed to take 100,000 new ordinary shares of RM1 per share, fully paid at par in part satisfaction of the sums due to them. e. The accumulated loss and all intangibles assets are to be written off. f. The asset were revalued as follows: RM Premises 100,000 Plant and machinery 160,000 Inventories 30,000 Trade receivables 29,000 g. The contingent liability materialized to the amount stated and the company settled the full amount. h. Another special resolution was passed to restore the authorized capital. REQUIRED: i. A related ledger account to utilized the scheme. (7 marks) ii. The Statement of financial position immediately after the scheme for reorganization. (4 marks)

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