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Nusa Tengah Bhd (NTB) has just received the approval for the capital internal reconstruction for the accounting year ended 31 December 2020. Earlier on, the company has passed the resolution for the internal reconstruction with the great confidence that it will make better performance as a result for this arrangement. The following available statement of financial position for the current year is available prior to the reconstruction: RM RM Non-Current Assets: Land and Property Plant and Machinery Motor Vehicle 880,000 450,000 280,000 1,610 ,000 250,000 Investments Intangible Assets: Research and Development 245,000 Current Assets: Trade Receivables Inventory Bank 168,000 112,000 (13,800) 266,200 Current Liabilities: Trade Payables Preference share payable Debenture interest payable 50,000 40,000 12,000 (102,000) 2,269,200 Equity and Liabilities: Authorised: 5,000,000 Ordinary Shares @RM1.00 each 500,000 5% non-cumulative Pref. Shares @RM2.00 each 5,000,000 1,000,000 6,000,000 Issued and fully paid up capital: 2,000,000 Ordinary Shares at RM1.00 each 400,000 5% non-cumulative Pref. Shares @RM2.00 each 2,000,000 800,000 2,800,000 Retained Earnings Share premium (790, 800) 60,000 (730,800) 6% Debentures 200,000 2,269,200 Additional information: 1. The preference dividend payable was for the declared dividend in 2018 accounting year. 2. There is a contingent liabilities amounting RM45,000 due to sold faulty product that caused injury to the customer. However, the NKB's legal advisor believes that there is a high potentiality that NKB will be found liable and has to pay RM40,000 only. 3. The scheme states the following terms: a. The share premium account to be fully utilized. b. The ordinary share capital to be written down by RM0.30 each. c. New ordinary shares to be issued for cash, and the existing shareholders agree to buy one (1) new unit for every five (5) existing shares held. d. The preference shareholders agree to receive cash payment of RM28,000 in settlement for last year's dividend. e. The current year's preference dividend to be declared, the preference shareholders agree to receive payment in the form of combined cash amounting RM16,000 and with 20,000 units of ordinary share capital at RM0.70 each. The remaining balance is waived. f. The existing preference shares are to be written down by RM0.50 each. g. The contingent liabilities to be recognized and only RM30,000 is paid with cash for now. h. Cost of the internal reconstruction is RM38,000 to be paid by cash. i. The debenture holders agree to receive 10,000 units of ordinary shares in lieu of cash payment for the current year's total outstanding interest j. Motor Vehicle value increases to RM295,000. k. Research and development to be written off. 1. The investments were sold out for cash amounting RM350,000. m. Inventory to be written down to RM100,000. Required: a) Show the journal entries for the related transactions of the internal reconstruction purpose. (8 marks) b) Show the accounts for Capital Reconstruction, Ordinary Share Capital, Preference Shares Capital, Contingent Liability, Inventory and Bank, and other relevant assets and liabilities accounts. (12 marks) c) Prepare the Statement of Financial Position (reconstructed) for the year ended 31 December 2020. (5 marks) d) State the required disclosure for internal reconstruction. (5 marks) Nusa Tengah Bhd (NTB) has just received the approval for the capital internal reconstruction for the accounting year ended 31 December 2020. Earlier on, the company has passed the resolution for the internal reconstruction with the great confidence that it will make better performance as a result for this arrangement. The following available statement of financial position for the current year is available prior to the reconstruction: RM RM Non-Current Assets: Land and Property Plant and Machinery Motor Vehicle 880,000 450,000 280,000 1,610 ,000 250,000 Investments Intangible Assets: Research and Development 245,000 Current Assets: Trade Receivables Inventory Bank 168,000 112,000 (13,800) 266,200 Current Liabilities: Trade Payables Preference share payable Debenture interest payable 50,000 40,000 12,000 (102,000) 2,269,200 Equity and Liabilities: Authorised: 5,000,000 Ordinary Shares @RM1.00 each 500,000 5% non-cumulative Pref. Shares @RM2.00 each 5,000,000 1,000,000 6,000,000 Issued and fully paid up capital: 2,000,000 Ordinary Shares at RM1.00 each 400,000 5% non-cumulative Pref. Shares @RM2.00 each 2,000,000 800,000 2,800,000 Retained Earnings Share premium (790, 800) 60,000 (730,800) 6% Debentures 200,000 2,269,200 Additional information: 1. The preference dividend payable was for the declared dividend in 2018 accounting year. 2. There is a contingent liabilities amounting RM45,000 due to sold faulty product that caused injury to the customer. However, the NKB's legal advisor believes that there is a high potentiality that NKB will be found liable and has to pay RM40,000 only. 3. The scheme states the following terms: a. The share premium account to be fully utilized. b. The ordinary share capital to be written down by RM0.30 each. c. New ordinary shares to be issued for cash, and the existing shareholders agree to buy one (1) new unit for every five (5) existing shares held. d. The preference shareholders agree to receive cash payment of RM28,000 in settlement for last year's dividend. e. The current year's preference dividend to be declared, the preference shareholders agree to receive payment in the form of combined cash amounting RM16,000 and with 20,000 units of ordinary share capital at RM0.70 each. The remaining balance is waived. f. The existing preference shares are to be written down by RM0.50 each. g. The contingent liabilities to be recognized and only RM30,000 is paid with cash for now. h. Cost of the internal reconstruction is RM38,000 to be paid by cash. i. The debenture holders agree to receive 10,000 units of ordinary shares in lieu of cash payment for the current year's total outstanding interest j. Motor Vehicle value increases to RM295,000. k. Research and development to be written off. 1. The investments were sold out for cash amounting RM350,000. m. Inventory to be written down to RM100,000. Required: a) Show the journal entries for the related transactions of the internal reconstruction purpose. (8 marks) b) Show the accounts for Capital Reconstruction, Ordinary Share Capital, Preference Shares Capital, Contingent Liability, Inventory and Bank, and other relevant assets and liabilities accounts. (12 marks) c) Prepare the Statement of Financial Position (reconstructed) for the year ended 31 December 2020. (5 marks) d) State the required disclosure for internal reconstruction