QUESTION 1 (50 Marks) Andesine Bhd found itself in financial difficulty and decided to reorganize its affairs. The following is the trial balance extracted from its books as at 30 June x6: Credit RM'000 Debit RM'000 150,000 500,000 130,000 30,000 80,000 65,000 200,000 Land Buildings (at cost) Equipment (at cost) Intangibles Inventories Trade receivables Accumulated losses Ordinary shares 6% cumulative preference shares 8% debentures Accumulated depreciation: Buildings Equipment Trade payables Loans from directors Bank overdraft 400,000 100,000 200,000 170,000 22,300 80,000 100,000 82,700 1,155,000 1,155,000 Notes: a) The issued shares capital is made up of 400 million ordinary shares, each fully paid up, and 100 million 6 percent cumulative preference shares. b) Preference dividends are in arrears for two years. c) There is a contingent liability of RM4 million. The scheme agreed to by all parties and sanctioned by the court is as follows: i. Each ordinary share is to be converted into one fully paid ordinary shares of 25 sen and the existing ordinary shareholders are to subscribe for one ordinary share for every one held at 35 sen per share payable in cash. ii. The 6 percent cumulative preference share are to be cancelled and in return the preference shareholders are to receive one 7 percent preference share of RM1 each and two 24 sen ordinary shares for every two 6 percent cumulative preference shares held. The preference shareholders agreed to waive 50 percent of the preference dividend in arrears and accept ordinary shares of 25 sen for the balance of the preference dividends in arrears. iii. The directors agreed to convert their loans to 5 percent debentures of nominal value RM100 million. iv. The accumulated losses, intangibles, bad debts of RM5,000,000 an of EM10,000,000 are to be written off. v. The following values are to be adopted: RM Land 170,000,000 Building 300,000,000 Equipment 46,000,000 Additional information: a) Cost of reconstruction amounted to RM1,300,000. b) Contingent liability materialized and the insurance company indemnified the company to the amount of RM3,000,000. Required: i. Journalise the above transaction. [25 marks] ii. Prepare the statement of financial position of Andesine Bhd immediately after the reconstruction. [25 marks]