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AEJ Bhd. has suffered from accumulated lost for the past three years. The management of AEJ Bhd. was advised to undertake a capital reconstruction scheme in order to turn around the company. The Statement of Financial Position of the company as at 30 April 2020 showed the following balances: RM RM Non Current Assets Freehold land and building 500,000 Plant and machinery 150.000 Patent and trademark 160,000 Research and development cost 55,500 Quoted investment 50,000 915.500 Current Assets Inventories 90,000 Account receivables 36,000 Cash and cash equivalent 64,000 190,000 Total Assets 1,105,500 Equity and Reserves Ordinary Shares at RM1 each 500,000 2% Preference shares at RM0.50 each 200,000 General reserves 331,000 Retained earnings (195,500) 835,500 Non Current Liabilities Bank loan 100,000 Current Liabilities Account payables 160,000 Short term borrowings 10,000 170,000 Total Equities and Liabilities 1,105,500 Notes: i. Preference dividends were in arrears for two years. ii. There is contingent liabilities of RM24,000. Having satisfied the legal requirements, a scheme of capital reduction was put into effect as follows: 1. The ordinary shares were to be replaced with a fresh issue of new ordinary shares at RM0.25 each and the preference shares were to be replaced with 3% preference shares of RM0.35 each. 2. The preference shareholders agreed to waive two third (2/3) of the preference dividend in arrears. They are willing to accept new ordinary shares for the balance. 3. The intangible assets and adverse profit and loss are to be written off. 4. RM16,300 of the general reserves is to be utilized for the scheme. 5. The assets are to revalued as follows: Plant and machinery RM120,000 Inventories RM40,000 Account receivables RM20,000 6. The investment is disposed at a profit of 60%. This proceed will be used to settle full amount of short term borrowings. 7 The creditors agreed to settle their accounts by accepting RM0.75 for every RM1 owed. 8. RM10,000 of the contingent liability is materialized, and AEJ Bhd. is responsible to settle this amount. 9. The company incurred RM4,000 for the reconstruction cost. 10. A special resolution was passed to restore the authorized share capital in ordinary shares of RM1 each and 3% preference shares of RM0.50 each with new par value. Required: a. Prepare journal entries to record the above transactions. b. Prepare the Statement of Financial Position immediately after the completion of the reconstruction scheme. (Show all the workings)