Calculate the total notional cash available for distribution

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Problem - Hudson Ltd was placed into liquidation on 31 March 2020. The cash available after all assets have been realised and liabilities and expenses paid was $5,000.

The share capital of Hudson Ltd immediately prior to liquidation was as follows.

Hudson Ltd (in Liquidation) - Extract from Balance Sheet

Issued Capital

Shares

$

7% $2.00 Cumulative Preference Shares (called to $1.90)

1,000

1,900

' A ' $1.00 Ordinary Shares (called to 50c)

10,000

5,000

' B ' $1.00 Ordinary Shares (called to 50c)

10,000

5,000

Less Calls in arrears (10c per share)

 

(500)

Total

 

11,400

Required -

a) Calculate the total notional cash available for distribution to shareholders.

b) Explain the purpose of liquidation.

Reference no: EM133042659

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