After payment of all claims apart from payment to capital contributors, the liquidator prepares the following statement of shareholders' equity for Hoppers Ltd:
$\begin{array}{lr}
& \$ \
\text { Preference shares fully paid (20 000) } & 200000 \
\text { Ordinary shares fully paid (4 000 000) } & 4000000 \
\text { General Reserve } & 100000 \
\text { Accumulated losses } & \underline{(900000)} \
\text { Total } & 3400000
\end{array}$

The total cash available is $1 200 000.What is the total difference between the interest of shareholders in the equity of Hoopers Ltd and the amount that they will receive.

Question

After payment of all claims apart from payment to capital contributors, the liquidator prepares the following statement of shareholders' equity for Hoppers Ltd:
$\begin{array}{lr} 
& \$ \
\text { Preference shares fully paid (20 000) } & 200000 \
\text { Ordinary shares fully paid (4 000 000) } & 4000000 \
\text { General Reserve } & 100000 \
\text { Accumulated losses } & \underline{(900000)} \
 \text { Total } & 3400000
\end{array}$

The total cash available is $1 200 000.What is the total difference between the interest of shareholders in the equity of Hoopers Ltd and the amount that they will receive.

Quizplus · Accepted Answer

The interest of shareholders in the equity of Hoppers Ltd is the total shareholders' equity, which is $3,400,000. However, the amount that they will receive is only the total cash available, which is $1,200,000. Therefore, the difference between these two amounts is $3,400,000 - $1,200,000 = $2,200,000. Therefore, the correct answer is D.

After Payment of All Claims Apart from Payment to Capital