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Plato Pty Ltd was a successful family business that gained its shareholder's approval to sell its operations to Socrates Lid three months ago. In accordance

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Plato Pty Ltd was a successful family business that gained its shareholder's approval to sell its operations to Socrates Lid three months ago. In accordance with the business combination agreement, Plato Lid transferred all of its identifiable net assets and its goodwill to Socrates Lid. In return, Socrates Lid made a $10,000,000 cash payment to Plato Pty Ltd. Plato Pty Ltd then initiated a voluntary liquidation to return the realised value of its paid-up capital, its accumulated profits, its goodwill, etc. to its members. The purchase consideration paid by Socrates Lid was more than sufficient to cover Plato Pty Ltd's outstanding debts. The latter company's directors made a declaration of solvency to their creditors. Plato Pty Ltd's liquidation has proceeded under the control of its members. Plato Pty Ltd's 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 Ltd's contributories. Details of Plato Pty Ltd's paid-up capital are as follows: Preference shares: 750,000 shares issued for $1, fully paid S 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 Ltd's 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 (25 marks)

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