Assets Building (net value) Land (freehold) Motor vehicles (net value) 245,900 311,000 197,800 33,300 98,700 Goodwill Inventory Bills receivable 59,000 945,700 (a) The ordinary shares were to be converted to RM0.55 each. (b) In lieu of dividends in arrears, the 6% preference shareholders agreed to accept 400,000 ordinary shares and 20,000 10% preference shares at RM1 each, and one ordinary share for each RM3 accrued. The dividends were in arrears for 3 years. (c) The shareholders agreed to subscribe four units ordinary shares for every 13 units held, payable in cash. (d) Goodwill and the profit and loss account were to be written-off. (e) Loan and the interest were to be exchanged with RM82,500 ordinary shares. (f) Cost of reorganization amounted to RM5,800 and contingent liabilities of RM20,500 was incurred by the company. g) The fair values of assets were as follows: Freehold land RM371,000 Building RM174,263 Motor vehicle RM144,800 You are required to prepare the following: (a) Journal entries to record the above scheme (narrations are not required) (b) Statement of financial position after the completion of the scheme
Assets Building (net value) Land (freehold) Motor vehicles (net value) 245,900 311,000 197,800 33,300 98,700 Goodwill Inventory Bills receivable 59,000 945,700 (a) The ordinary shares were to be converted to RM0.55 each. (b) In lieu of dividends in arrears, the 6% preference shareholders agreed to accept 400,000 ordinary shares and 20,000 10% preference shares at RM1 each, and one ordinary share for each RM3 accrued. The dividends were in arrears for 3 years. (c) The shareholders agreed to subscribe four units ordinary shares for every 13 units held, payable in cash. (d) Goodwill and the profit and loss account were to be written-off. (e) Loan and the interest were to be exchanged with RM82,500 ordinary shares. (f) Cost of reorganization amounted to RM5,800 and contingent liabilities of RM20,500 was incurred by the company. g) The fair values of assets were as follows: Freehold land RM371,000 Building RM174,263 Motor vehicle RM144,800 You are required to prepare the following: (a) Journal entries to record the above scheme (narrations are not required) (b) Statement of financial position after the completion of the scheme
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 12CE
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