Sox Ltd Has Two Classes of Ordinary Shares: 100 000

question 6

Multiple Choice

Sox Ltd has two classes of ordinary shares: 100 000 fully paid A ordinary shares (paid-up share capital $100 000) and 25 000 fully paid B ordinary shares (paid-up share capital $100 000) .The company was placed in liquidation.Liquidator's fees totaled $85 000, the assets were sold for $1 775 000 and these assets had a carrying amount of $1 600 000.
-Which of the following entries is most likely to correctly show the members' distribution account of Sox Ltd?

• A)\(\begin{array} { l c c }
• & \text { Debit (\$) } & \text { Credit (\$) } \\
• \text { Paid-up capital } - \text { A ordinary } & & 100000 \\
• \text { Paid-up capital - B ordinary } & & 100000 \\
• \text { Retained profits } & ? & \\
• \text { Reserves } & ? & \\
• \text { Liquidation } & ? & \\
• \text { Receipts and payments account } & ? &
• \end{array}\)
• B)\(\begin{array}{lcc}
• & \text { Debit (\$) } & \text { Credit (\$) }\\
• \text { Paid-up capital }-\text { A ordinary } &&100000 \\
• \text { Paid-up capital }-\text { B ordinary } & &100000 \\
• \text { Retained profits } &? & \\
• \text { Reserves } & &? \\
• \text { Liquidation } & ? & \\
• \text { Receipts and payments account } & ? &
• \end{array}\)
• C)\(\begin{array}{lcc}
• & \text { Debit (\$) } & \text { Credit (\$) }\\
• \text { Paid-up capital }-\text { A ordinary } &&100000 \\
• \text { Paid-up capital }-\text { B ordinary } & &50000 \\
• \text { Retained profits } &? & \\
• \text { Reserves } & &? \\
• \text { Liquidation } & ? & \\
• \text { Receipts and payments account } & ? &
• \end{array}\)
• D)\(\begin{array} { l r r }
• & \text { Debit (\$) } & \text { Credit (\$) } \\
• \text { Paid-up capital } - \text { A ordinary } & 100000 & \\
• \text { Paid-up capital } - \text { B ordinary } & 50000 & ? \\
• \text { Retained profits } & & ? \\
• \text { Reserves } & & ? \\
• \text { Liquidation } & & ?
• \end{array}\)

---

Definitions:

Residual Income

The amount of income that an individual has after all personal debts and expenses have been paid from his or her earnings.

Return On Investment

A financial metric used to evaluate the efficiency of an investment, calculated as net profit divided by the initial cost of investment.

Return On Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by the cost of investment.

Deferred Replacement

A decision to postpone the replacement of assets, often to manage costs or due to budget constraints, which may affect operational efficiency.