The Details Below Were Extracted from the Accounting Records of Capricorn

question 29

Multiple Choice

The details below were extracted from the accounting records of Capricorn Ltd (a company in the process of liquidation) . $\begin{array}{ll}\text {\( 100000 \$ 1 \) preference shares fully paid }&\$ 100,000\\\text {\( 200000 \$ 1 \) ordinary shares paid to 50 cents }&100,000\\&\$200,000\\\text { Cash available (after payment of all creditors) }&\$20,000\end{array}$
Assume that the constitution of Capricorn Ltd states that in the event of liquidation, all shares are to rank equally, based on the number of shares held, in distributing any surplus or deficiency.
What will be the deficiency or surplus apportioned to ordinary shareholders?

• A) A surplus of $40 000.
• B) A deficiency of $100 000.
• C) A surplus of $100 000.
• D) A deficiency of $120 000.