You have a $4,000 balance on your credit card. The interest rate on the card is a 17.68% APR, based on monthly compounding. Assume that you are not going to add any more charges to the card. If you make monthly (end-of-the-month) payments of $265 each, how long in years will it take you to pay off the card? Input your answer rounded to the nearest 0.1 year (in other words, nearest 10th of a year).

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■ KMH Bhd was incorporated as a public limited company in 2016 and listed in Bursa Malaysia. The company was reasonably successful until 2019 but in the last few years trading losses have been incurred due to the Covid-19 pandemic and the board is now considering carrying out a scheme of capital reduction to save the company. The following scheme has been duly passed and the approval of the court obtained. A Statement of Financial Position produced as of 31 December 2021 revealed the following position. Statement of Financial Position as at 31 December 2021 Additional information: 1. 2. 3. 4. Current Liabilities Trade payables Cash and cash equivalent Total Equity and Liabilities Note: preference dividends have been in arrears for two years. 5. 6. a. Non-Current Assets Land Plant and machinery Fixture and fittings b. Investments Goodwill C. Current Assets Inventories Trade receivables Total Assets Issued and paid-up capital 2,500,000 ordinary shares 2,000,000 8% cumulative preference shares Retained earnings Non-Current Liabilities 10% debentures 7. The company had paid RM4,000 for legal expenses Required: Prepare the relevant journal entries to record the above transactions. RM 1,800,000 1,290,000 550,000 510,000 130,000 The accumulated losses and all intangible assets are to be written off. The following are the information related to the new value of assets: 90,000 370,000 4,740,000 i. Fixtures and fittings decreased to RM420,000 ii. Plant and machinery are RM700,000 iii. Inventories of RM10,000 to be written off as obsolete iv. A debt of RM50,000 of its trade receivables was uncollectible 2,500,000 1,000,000 (480,000) Ordinary shares are reduced by RM0.40 each whilst the preference shares are reduced to RM0.30 each. Both shares are then converted into new ordinary shares of RM1 each. 540,000 The preference shareholders agreed to waive 50% of the dividends to them. The balance was settled by issuing one unit of ordinary shares for every RM1 preference dividend in arrears. 700,000 480,000 4,740,000 The debenture holders agreed to take a piece of land costing RM500,000 at an agreed value of RM800,000 and paid the balance to the company after settling the amount due to them. The remaining land was revalued to RM2,000,000. Investments are sold at a profit of RM170,000 (12 marks) Prepare the Statement of Financial Position as at 1 January 2022 immediately after the reconstruction scheme has been undertaken by KMH Bhd. (8 marks) Briefly explain the reasons why the shareholders agreed to the reduction in the nominal value of their shares. (5 marks) ■ KMH Bhd was incorporated as a public limited company in 2016 and listed in Bursa Malaysia. The company was reasonably successful until 2019 but in the last few years trading losses have been incurred due to the Covid-19 pandemic and the board is now considering carrying out a scheme of capital reduction to save the company. The following scheme has been duly passed and the approval of the court obtained. A Statement of Financial Position produced as of 31 December 2021 revealed the following position. Statement of Financial Position as at 31 December 2021 Additional information: 1. 2. 3. 4. Current Liabilities Trade payables Cash and cash equivalent Total Equity and Liabilities Note: preference dividends have been in arrears for two years. 5. 6. a. Non-Current Assets Land Plant and machinery Fixture and fittings b. Investments Goodwill C. Current Assets Inventories Trade receivables Total Assets Issued and paid-up capital 2,500,000 ordinary shares 2,000,000 8% cumulative preference shares Retained earnings Non-Current Liabilities 10% debentures 7. The company had paid RM4,000 for legal expenses Required: Prepare the relevant journal entries to record the above transactions. RM 1,800,000 1,290,000 550,000 510,000 130,000 The accumulated losses and all intangible assets are to be written off. The following are the information related to the new value of assets: 90,000 370,000 4,740,000 i. Fixtures and fittings decreased to RM420,000 ii. Plant and machinery are RM700,000 iii. Inventories of RM10,000 to be written off as obsolete iv. A debt of RM50,000 of its trade receivables was uncollectible 2,500,000 1,000,000 (480,000) Ordinary shares are reduced by RM0.40 each whilst the preference shares are reduced to RM0.30 each. Both shares are then converted into new ordinary shares of RM1 each. 540,000 The preference shareholders agreed to waive 50% of the dividends to them. The balance was settled by issuing one unit of ordinary shares for every RM1 preference dividend in arrears. 700,000 480,000 4,740,000 The debenture holders agreed to take a piece of land costing RM500,000 at an agreed value of RM800,000 and paid the balance to the company after settling the amount due to them. The remaining land was revalued to RM2,000,000. Investments are sold at a profit of RM170,000 (12 marks) Prepare the Statement of Financial Position as at 1 January 2022 immediately after the reconstruction scheme has been undertaken by KMH Bhd. (8 marks) Briefly explain the reasons why the shareholders agreed to the reduction in the nominal value of their shares. (5 marks)

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