On 30 April 2023, Puppy Ltd went into voluntary liquidation. At that date, equity comprised the following.
Question:
On 30 April 2023, Puppy Ltd went into voluntary liquidation. At that date, equity comprised the following.
Share capital:
200 000 preference shares issued for $1 and fully paid $ 200 000
440 000 ordinary shares issued for $1 and fully paid 440 000
320 000 ‘A’ ordinary shares issued for $1 and paid to 60c 192 000
40 000 ‘B’ ordinary shares issued for $1 and paid to 50c 20 000
852 000
Retained earnings (accumulated losses) (512 000)
Total equity $ 340 000
The liquidator proceeded to realize all of the company’s assets. The loss on liquidation amounted to $64 000 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.
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville