On 30 April 2017, Moth Ltd went into voluntary liquidation. At that date, equity comprised: Share capital: 200,000 preference shares issued for $1 and fully paid 440,000 ordinary shares issued for $1 and fully paid 320,000 ‘A’ ordinary shares issued for $1 and paid to 60c 40,000 ‘B’ ordinary shares issued for $1, called and paid to 50c $ 200,000 440,000 192,000 20,000 Retained earnings 852,000 (512,000) Total equity $ 340,000 The liquidator proceeded to realise all of the company’s assets. The loss on liquidation amounted to $128,000 and, after paying sundry creditors, there was a cash balance of $212,000 available for distribution to the shareholders. (The constitution gives preference shareholders a prior claim to return of capital, and other shareholders are to rank equally, based on the number of shares held.) Required Prepare a statement of the distribution to shareholders supported by a detailed explanation of the apportionment of any cash among the various classes of shareholders.
On 30 April 2017, Moth Ltd went into voluntary liquidation. At that date, equity comprised: Share capital: 200,000 preference shares issued for $1 and fully paid 440,000 ordinary shares issued for $1 and fully paid 320,000 ‘A’ ordinary shares issued for $1 and paid to 60c 40,000 ‘B’ ordinary shares issued for $1, called and paid to 50c $ 200,000 440,000 192,000 20,000 Retained earnings 852,000 (512,000) Total equity $ 340,000 The liquidator proceeded to realise all of the company’s assets. The loss on liquidation amounted to $128,000 and, after paying sundry creditors, there was a cash balance of $212,000 available for distribution to the shareholders. (The constitution gives preference shareholders a prior claim to return of capital, and other shareholders are to rank equally, based on the number of shares held.) Required Prepare a statement of the distribution to shareholders supported by a detailed explanation of the apportionment of any cash among the various classes of shareholders.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 30 April 2017, Moth Ltd went into voluntary liquidation. At that date, equity comprised:
Share capital:
200,000 preference shares issued for $1 and fully paid
440,000 ordinary shares issued for $1 and fully paid
320,000 ‘A’ ordinary shares issued for $1 and paid to 60c
40,000 ‘B’ ordinary shares issued for $1, called and paid to 50c
$ 200,000
440,000
192,000
20,000
Retained earnings
852,000
(512,000)
Total equity
$ 340,000
The liquidator proceeded to realise all of the company’s assets. The loss on liquidation amounted to $128,000 and, after paying sundry creditors, there was a cash balance of $212,000 available for distribution to the shareholders. (The constitution gives preference shareholders a prior claim to return of capital, and other shareholders are to rank equally, based on the number of shares held.)
Required
Prepare a statement of the distribution to shareholders supported by a detailed explanation of the apportionment of any cash among the various classes of shareholders.
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