ONE-DIVIDEND IMPUTATION Arabella Limited is a close company with four shareholders. Celeste and Brenda each own 25%, Dominic owns 30% and Edward owns 20%. On 1st April 2016 the company has a credit balance in its Imputation Credit Account of $25,000. Over the subsequent year, the following transactions occur: 1 May 2016 1 June 2016 1 July 2016 1 August 2016 1 September 2016 1 October 2016 1 November 2016 1 December 2016 1 January 2017 1 February 2017 Arabella pays a dividend of $20,000. Maximum imputation credits are attached. Dominic sells two-thirds of his ownership (i.e. 20% of the company) to a new shareholder (Freddy), leaving him with 10%. The company makes a pro-rata bonus issue to all shareholders, capitalising $10,000 of retained earnings (no declaration is made in respect of this bonus issue). The company pays the first instalment of 2016/2017 provisional tax of $4,000 The company receives interest of $5,000, after deduction of $2,000 RWT. Celeste sells all her 25% ownership to Freddy. The company pays the second instalment of 2016/2017 provisional tax of $4,000 The company pays a second dividend for the year of $15,000. Imputation credits are attached at 25%. The company receives a refund of tax of $7,000. Of this amount, $2,000 is for GST and $5,000 is a refund of income tax relating to the 2007/08 income year. The company paid 2016 terminal tax of $10,000, together with use- of-money interest of $500. Required: (a) Prepare Arabella Limited's Imputation Credit Account (ICA) for the period 1 April 2016 to 31 March 2017. Prepare you answer in whole dollar amounts only. (3 marks) (b) Explain whether Arabella Limited could have better managed its imputation affairs in the period 1 April 2016 to 31 March 2017 and, if so, in what way. (3 marks) (c) Explain what must be done when a company has an ICA with a debit balance. (2 marks)