Plato Pty Ltd was a successful family business that gained its shareholders approval to sell its operations to Socrates Ltd three months ago. In accordance with the business combination agreement, Plato Ltd transferred all of its identifiable net assets to Socrates Ltd. In return, Socrates Ltd made a $10,000,000 cash payment to Plato Pty Ltd. Plato Pty Ltd then initiated a voluntary liquidation to preserve the goodwill acquired by Socrates Ltd and to distribute the realised value of its identifiable net assets and its goodwill to its members. The purchase consideration paid by Socrates Ltd was more than sufficient to cover Plato Pty Ltds outstanding debts. The latter companys directors made a declaration of solvency to their creditors. Plato Pty Ltds liquidation has proceeded under the control of its members.

Plato Pty Ltds liquidator has now paid all of all the costs of its liquidation and all of its creditors. She has $8,000,000 on hand to distribute to Plato Pty Ltds contributories. Details of Plato Pty Ltds paid-up capital are as follows:

Preference shares: 750,000 shares issued for $1, fully paid $ 750,000

Ordinary shares: 500,000 shares issued for $2, paid to $1.70 850,000

A Ordinary shares: 1,000,000 shares issued for $5, paid to $1.25 1,250,000

B Ordinary shares: 500,000 shares issued for $10, paid to $2.50 1,250,000

Additional information

(a) Plato Pty Ltds constitution provides for the following:

(i) Preference shareholders receive preferential treatment as to dividends and the return of paid-up capital. The constitution does not offer preference shareholders any other privileges

(ii) Ordinary shareholders, A Ordinary shareholders and B Ordinary shareholders rank equally (after preference shareholders) regarding the return of capital based on the number of shares held.

(b) Arrears of preference dividends equal $75,000.

(c) Any calls necessary to adjust the rights of contributories are recoverable.

Required

How much of the $8,000,000 available will each class of shareholders receive? Show clearly any workings in relation to the final distribution to shareholders