After payment of all claims apart from payments to capital contributors, the liquidator prepares the following statement of shareholders' equity for Hoppers Ltd:
$\begin{array}{llcc}
\text { } &\$\
\text {Ordinary shares fully paid ( 5000000$ ) $ } &2000000 \
\text { Reserve} &?\
\text { Accumulated losses } &(1500000)\
\text { Total} &?\
\end{array}$

What is the total of the reserves if the cash available for distribution after all other claims is $850 000 and the deficit is $550 000?

Question

After payment of all claims apart from payments to capital contributors, the liquidator prepares the following statement of shareholders' equity for Hoppers Ltd:
$\begin{array}{llcc}
 \text {  } &\$\
 \text {Ordinary shares fully paid ( 5000000$ ) $  } &2000000  \
 \text {  Reserve} &?\
 \text { Accumulated losses } &(1500000)\
 \text {  Total} &?\
\end{array}$

What is the total of the reserves if the cash available for distribution after all other claims is $850 000 and the deficit is $550 000?

Quizplus · Accepted Answer

The total of the reserves is $900,000. This is calculated by adding the cash available for distribution ($850,000) to the deficit ($550,000) and then subtracting the total of the ordinary shares fully paid ($2,000,000) and the accumulated losses ($1,500,000).

After Payment of All Claims Apart from Payments to Capital