FAR320/QUIZ/JUNE2022
Name :
Student no :
Group :
Date :
QUESTION
Gawat Bhd had been incurring losses for the past few years. A resolution was passed to have
the affairs of the company reorganized. Following is the statement of financial position of the
company as at 31 March 2022.
RM
Non-current assets
Land and building 280,000
Office equipment 64,000
Investment 100,000
Goodwill 30,000
Current assets
Inventories 77,000
Trade receivables 80,000
Total assets 631,000
250,000 ordinary shares issued at RM2.00 each 500,000
200,000 8% preference shares issued at RM1.00 each 200,000
Accumulated loss (264,000)
Long term liabilities
Bank loan 40,000
Current liabilities
Trade payables 90,000
Bank overdraft 65,000
Total equity and liabilities 631,000
The company had formulated a scheme of capital reduction, which has been approved to take
effect on 1 April 2022. The capital reduction scheme contained the following provisions:
1. The ordinary shares and 8% preference shares were to be reduced to RM1.00 and
RM0.75 each respectively.
2. Preference dividends were four (4) years in arrears. The preference shareholders
agreed to accept 40,000 fully paid ordinary shares of RM1.00 each as full settlement of
these arrears.
3. The net realisable value of inventory on 31 March 2022 was RM68,000.
4. A land and building with a carrying amount of RM100,000 were revalued to RM125,000
and sold at that price . The sales proceeds were used to settle bank loan and trade
payable in full. The creditors of trade payables agreed to accept RM0.90 for every
RM1.00 owed to them.
1
FAR320/QUIZ/JUNE2022
5. The accumulated losses, intangible assets and a bad debt of 10% of trade receivables
were written off.
6. The investment was revalued at RM120,000 and sold at that price.
7. Expenses in respect of the capital reduction scheme amounted to RM3,000.
8. The ordinary shareholders agreed to subscribe for additional 50,000 ordinary shares
issued at RM1.20 each.
REQUIRED:
1. Find the actual loss suffered by the company.
(5 marks)
2. Show journal entries to record the transactions stated in additional information 1 to 8.
(13 marks)
3. Prepare the statement of financial position as at 1 January 2022.
(7 marks)
(Total: 25 marks)
ANSWER
Question 1
Question 2
2
FAR320/QUIZ/JUNE2022
3
FAR320/QUIZ/JUNE2022
Question 3
