Zachary Ltd went into liquidation on 1 July 2021. You have been provided with the following information:

The liquidator has reviewed the companys constitution and identified preference shareholders were preferential as to the return of capital and did not share in surplus, whilst the different classes of ordinary shareholders, Class A and Class B, by number, ranked equally.

Shares upon which calls are made and which are not collected from the shareholder are to be forfeited by the company with any contributed capital being retained by the company. There are 4,000 'A' ordinary shares on which calls remain outstanding and will need to be forfeited as part of finalising the shareholder distributions.

After paying out all the creditors which have been proved, the liquidator has determined the cash available for distribution, and has begun the process of completing the shareholder distribution calculations using the following template:

Share class	No. of shares	Paid to	Notional Call	Notional Refund	Actual Refund/(Call)	Deficiency / (surplus) share
Preference	600,000	600,000	-	600,000	600,000	0.00
A ordinary
B ordinary
Total
Cash available		7,480,235
Deficiency		1,616,765
Total notional cash

Required:

You have been asked to assist the liquidator and provide the following information:

a) What is the actual refund/call amount for B ordinary shares? Write a brief memo to the B ordinary shareholders explaining what this means for them. (5 marks)

b) What is dollar amount of the A ordinary shareholders share of the loss on liquidation? (2 marks)

Note: you are not necessarily required to show the complete table as part of your answer, however you should show your workings for the answers you provide.

$ S Zachary Ltd Statement of Financial Position as at 30 June 2021 (Extract) $ Shareholders' equity Share capital 600,000 preference shares of $1 each 10,000,000 'A' ordinary shares of $1 each paid to $0.75 7,500,000 Less: Calls in arrears (50 000 at $0.25) 12,500 1,000,000 'B' ordinary shares of $2 each paid to $1 600,000 7,487,500 1,000,000 9,037,500 Revaluation surplus Less: Accumulated losses Total shareholders' equity 3,800,000 1,979,700 2,070,300 10,907,800 $ S Zachary Ltd Statement of Financial Position as at 30 June 2021 (Extract) $ Shareholders' equity Share capital 600,000 preference shares of $1 each 10,000,000 'A' ordinary shares of $1 each paid to $0.75 7,500,000 Less: Calls in arrears (50 000 at $0.25) 12,500 1,000,000 'B' ordinary shares of $2 each paid to $1 600,000 7,487,500 1,000,000 9,037,500 Revaluation surplus Less: Accumulated losses Total shareholders' equity 3,800,000 1,979,700 2,070,300 10,907,800