Prepare the ledger accounts for liquidation as shown below:  (Note: the template of ledger account is provided. You can choose to copy the tables, create tables, or provide the account information without table lines.)  i) Liquidation account.  ii) The Liquidator's Receipts and Payments.  iii) The Shareholders' Distribution account.  Liquidation Liquidator's Receipts and Payments

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

 Glowworm Ltd went into voluntary liquidation on 30 June 2024. The statement of financial position prepared on that date is as follows. GLOWWORM LTD Statement of financial position as at 30 June 2024 Current assets Cash $ 32 000 Inventories 126 000 Accounts receivable $ 72 200 Less: Allowance for doubtful debts (8 200 ) 64 000 Non-current assets Plant and equipment 336 000 Less: Accumulated depreciation - plant and equipment (70 400 ) 265 600 Land 181 200 Shares in listed companies 104 000 Total assets 772 800 Current liabilities Accounts payable 86 400 Other payables 32 200 Non-current liabilities Mortgage on land 170 000 Debentures 300 000 Total liabilities 588 600 Net assets $ 184 200 Equity Share capital: Preference: 40 000 shares, issued at $1, fully paid 40 000 Ordinary 'A' 50 000 shares, issued at $1, fully paid 50 000 Ordinary 'B' 40 000 shares, issued at $1, called to 60c 24 000 114 000 General reserve 14 000 Retained earnings 56 200 Total equity $ 184 200 Additional information 

• Liquidator's remuneration and expenses amounted to $3600. 

• Other payables of $32 200 comprised the following. Salary & wages payable (12 000 + 4 000) $ 16 000 Director's salary-balance 1 600 Annual leave payable 8 800 Telephone bill payable 1 800 Income tax payable 4 000

 • The debentures are secured by a circulating security interest over the company's assets. 

• The mortgage holder took possession of the land and sold it for $163 400. 

• Other assets realized the following amounts. Inventories $ 108 000 Accounts receivable 52 000 Plant and equipment 268 000 Shares in listed companies 122 000 

• Uncalled capital (if required to be called up) is recoverable. 

• Preference shareholders are preferential as to dividends and return of capital. The constitution does not provide any further rights for preference shareholders. 

• In relation to return of capital, Ordinary 'A' shareholders and Ordinary 'B' shareholders rank equally after preference shareholders. 

Required 

Prepare the ledger accounts for liquidation as shown below:

 (Note: the template of ledger account is provided. You can choose to copy the tables, create tables, or provide the account information without table lines.)

 i) Liquidation account. 

ii) The Liquidator's Receipts and Payments. 

iii) The Shareholders' Distribution account.  Liquidation Liquidator's Receipts and Payments

Expert Solution
steps

Step by step

Solved in 5 steps with 2 images

Blurred answer
Knowledge Booster
Accounting for Liquidation of Companies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education