Question 1.3 Uchechi Limited has been in newspaper business for over 70 years. It has continuously been incurring losses for the past 10 years. A scheme of reconstruction was approved by all the interested parties. The statement of financial position as at 31" December, 2018 showed: Non-Current Assets: N'000 N000 N'000 Non-current Assets less depreciation 1,800,000 Current Assets: Inventories at cost 720,000 Trade Receivables 960,000 Profit and Loss Account 900.000 2.580.000 Current Liabilities (Due within a year) Bills Payable (Preference) 60,000 Sundry Payables (others) 1,440,000 Bank overdraft (Secured) 1.200.000 (2.700.000) (120.000) 1.680.000 Financed By: Share Capital: Ordinary Shares of Ni each 1.200.000 6% Cumulative Preference Shares of Nl each 480,000 1.680.000 The scheme of reconstruction provided that: (1) A new company Ogechi Limited be formed to take over the assets and liabilities of Uchechi Limited as at 31 December, 2018. (ii) 240,000,000 ordinary shares of N1.00 each in Ogechi Limited, be credited as 50k per share paid-up to be issued to the liquidators of Uchechi's Limited for the 28 benefit of that company's ordinary shareholders, who had agreed to pay cap the balance of 50k per share immediately. (ii) 480,000,000 Preference shares of N1.00 each in Ogechi Limited, be credited 75k per share paid-up to be issued to the liquidators of Uchechi's Limited for the benefit of that company's preference shareholders, who had agreed to pay up the balance of 25k per share immediately. In addition, N57,600,000 in 6% unsecured Debentures (redeemable after 5 years) to be issued as compensation for arrears of Preference dividends. (iv) Ogechi Limited to re-imburse liquidation expenses of Uchechi Limited N12.000.000. () Ogechi Limited is to discharge Preference creditors in cash. (vi) Ogechi Limited decided to adopt the following values for tangible assets acquired as follows: N1,600,000,000 for Non-current assets N600,000,000 for Inventories N960,000,000 for trade receivables (vii) Liability to other creditors to be fully satisfied as follows: N720,000,000 in cash N360,000,000 in acceptance of a bill of exchange payable after 120 days (viii) The authorized capital of Ogechi Limited will be N3,000,000,000 divided into 1.500,000,000 7% cumulative preference shares of N1.00 each and 1,500,000,000 ordinary share of N1.00 each. (ix) The Directors of Ogechi Limited have agreed to subscribe for 840,000,000 ordinary shares of NI.00 each payable in full with application (x) Ogechi Limited decided to pay off bank overdraft of N240,000,000 and the balance to be secured on non-current assets. (xi) Preliminary expenses of Ogechi Limited amount to N24,000,000,000. Assuming that all the provisions of the scheme above are fulfilled, you are required to show (a) In the books of Uchechi Limited: (i) Realization Account Shareholders Account (b) Opening statement of financial position Question 1.3 Uchechi Limited has been in newspaper business for over 70 years. It has continuously been incurring losses for the past 10 years. A scheme of reconstruction was approved by all the interested parties. The statement of financial position as at 31" December, 2018 showed: Non-Current Assets: N'000 N000 N'000 Non-current Assets less depreciation 1,800,000 Current Assets: Inventories at cost 720,000 Trade Receivables 960,000 Profit and Loss Account 900.000 2.580.000 Current Liabilities (Due within a year) Bills Payable (Preference) 60,000 Sundry Payables (others) 1,440,000 Bank overdraft (Secured) 1.200.000 (2.700.000) (120.000) 1.680.000 Financed By: Share Capital: Ordinary Shares of Ni each 1.200.000 6% Cumulative Preference Shares of Nl each 480,000 1.680.000 The scheme of reconstruction provided that: (1) A new company Ogechi Limited be formed to take over the assets and liabilities of Uchechi Limited as at 31 December, 2018. (ii) 240,000,000 ordinary shares of N1.00 each in Ogechi Limited, be credited as 50k per share paid-up to be issued to the liquidators of Uchechi's Limited for the 28 benefit of that company's ordinary shareholders, who had agreed to pay cap the balance of 50k per share immediately. (ii) 480,000,000 Preference shares of N1.00 each in Ogechi Limited, be credited 75k per share paid-up to be issued to the liquidators of Uchechi's Limited for the benefit of that company's preference shareholders, who had agreed to pay up the balance of 25k per share immediately. In addition, N57,600,000 in 6% unsecured Debentures (redeemable after 5 years) to be issued as compensation for arrears of Preference dividends. (iv) Ogechi Limited to re-imburse liquidation expenses of Uchechi Limited N12.000.000. () Ogechi Limited is to discharge Preference creditors in cash. (vi) Ogechi Limited decided to adopt the following values for tangible assets acquired as follows: N1,600,000,000 for Non-current assets N600,000,000 for Inventories N960,000,000 for trade receivables (vii) Liability to other creditors to be fully satisfied as follows: N720,000,000 in cash N360,000,000 in acceptance of a bill of exchange payable after 120 days (viii) The authorized capital of Ogechi Limited will be N3,000,000,000 divided into 1.500,000,000 7% cumulative preference shares of N1.00 each and 1,500,000,000 ordinary share of N1.00 each. (ix) The Directors of Ogechi Limited have agreed to subscribe for 840,000,000 ordinary shares of NI.00 each payable in full with application (x) Ogechi Limited decided to pay off bank overdraft of N240,000,000 and the balance to be secured on non-current assets. (xi) Preliminary expenses of Ogechi Limited amount to N24,000,000,000. Assuming that all the provisions of the scheme above are fulfilled, you are required to show (a) In the books of Uchechi Limited: (i) Realization Account Shareholders Account (b) Opening statement of financial position