The details below were extracted from the accounting records of Great South East Ltd (a company in the process of liquidation).

Assume that the constitution of Great South East 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 preference shareholders?

Question

The details below were extracted from the accounting records of Great South East Ltd (a company in the process of liquidation).

Assume that the constitution of Great South East 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 preference shareholders?

Quizplus · Accepted Answer

Preference shareholders have a fixed claim on the assets of the company, and any remaining assets after their claims are satisfied will go to ordinary shareholders. However, in this case, there is not enough money to pay all preference shareholders in full, resulting in a deficiency. The total amount of preference shares is $225,000, but there is only $202,500 available to distribute. Therefore, there is a deficiency of $22,500, which will be apportioned among the preference shareholders based on the number of shares held.

The Details Below Were Extracted from the Accounting Records of Great