Question

7.2 The following sabab as a trial balance as at 31 December 9 extracted from the books of Goodwood Property Bhd ROOO an ordinary shares 200mx 5 50.001 to 200.000 on 5% cumulative preference shares 70,000 80,000 50.000 12.800 96.000 es debentures Prvation reserve est payable on debentures W Loans from directors Bank overdratt 36.960 561760 Building Equipment Intangible assets Investments Inventories and work-in-progress Trade receivables Accumulated losses 200.000 27.246 16,754 40,000 47.000 120.247 70,692 39.821 561,760 a meeting of shareholders and directors, it was decided to carry out a scheme of internal reconstruction o the financial difficulties faced by the company. The following scheme was duly passed and the approval of the court obtained • Each ordinary share is to be reduced to 50 sen cach. • The existing 70 million preference shares are to be exchanged for a new issue of 35 million 8 percent cumulative preference shares paid to RM1 each and 70 million ordinary shares of 50 sen each The ordinary shareholders are to accept a reduction in the paid-up value of their shares from RMT to 50 sen and to subscribe for a new issue on the basis of one for one at a price of 60 sen per share The debenture holders are to accept 10,000,000 ordinary shares of 50 sen each in leu of the interest payable. It is agreed that the value of the interest lability is equivalent to the paid up value of the shares issued The interest rate is to be increased to 9.5 percent More 9.5 percent debentures worth RM9.000.000 are to be issued and to be taken up by the existing holders at RM90 per RM100 • Directors' loans of RM6,000,000 are to be cancelled. The balance is to be settled by the issue of 16.500.000 ordinary shares of 50 sen each • Intangible assets and the accumulated losses are to be written off • The investment is to be measured at its fair value of RM160,000,000 . A sum of RM46,000,000 is to be paid to trade creditors immediately and the balance at Quarterly interval Trade receivables of RM7298,000 are to be written off The remaining assets which were professionaly valued should be included in the accounting records as follows: RM 000 163 568 50.000 11.000 50,000 Land Building Equipment Inventories and work-in-progress The asset revaluation reserve is to be utilised for the scheme