Unrecorded Liabilities Recorded in Liquidation Account

The provided assignment content is related to the liquidation of a company, where various assets and liabilities are accounted for. The key transactions involve the sale of land and building, which results in a loss on sale of $19200. Other significant transactions include the payment of liabilities such as accounts payable, income tax payable, and salaries and wages payable. The assignment also involves the calculation of deficiency, which is transferred to the liquidation account. Finally, the cash available for distribution to shareholders is calculated, resulting in a total notional cash per share of $0.400 cents.

BUSN3047
Company accounting
Semester 2, 2017

TABLE OF CONTENTS
Statement of affairs....................................................................................................................3
Journal entries for Wind up of Remi Ltd...................................................................................5
Final distribution to shareholders...............................................................................................8
Liquidation account....................................................................................................................9
References................................................................................................................................11

STATEMENT OF AFFAIRS
Statement of Affairs
REMI LTD (In Liquidation)
Assets and Liabilities as at 30th June 2017
(Amount in $)
Particular Valuation Estimated
Realisable Value
1. Assets not specifically
charged
Plant & Equipment 98400-16800
=81600
56000
Bills Receivable 57600 33600
Cash at Bank 1200 1200
Stock 146400 112800
Other Assets: Accounts Receivable 69600 42000
356400 245600
2. Assets subject to specific
charge
Land & Building 95000
Land 37200
Building (Book Value -
Depreciation)
108000-
36000
=72000
Total 109200
Less: Amount Owing ($81600+2400)
(Gitman, Juchau and Flanagan, 2015)
(84000) 27400 11000 (95000-
84000)
Total Assets 256600
Total estimated realisable value 256600

3. Less preferential creditors
entitled to priority over
holders of debentures under a
floating charge
Salaries and wages $1680
$254920
4. Less amounts owing and
secured by debenture or
floating charge over company
assets (Mills and Woodford,
2015)
Debentures $34560+$1440 $36000
$218920
5. Less preferential creditors -
Estimated amount available to
creditors
$218920
6. Creditors (unsecured)
Trade creditors 108000+360
0
$111600
Income tax payable 4800 $4800 $116400
Balance available to shareholders $102520
Payment of dividend in arrear $14400
Amount to be distributed among
shareholders
$88120
Share capital issued
Preference share capital $60000
Share capital A $108000
Share capital B $60000 $228000

Share capital paid
Preference share capital $60000
Share capital A $108000
Share capital B $36000 $204000
JOURNAL ENTRIES FOR WIND UP OF REMI LTD
(Amount in $)
Liquidation A/c Dr 372000
Accounts Receivable Cr. 69600
Bills Receivable Cr. 57600
Inventory Cr. 146400
Plant & Equipment Cr. 98400
(Assets accounts transferred to liquidation account)
Accumulated Depreciation (Plant & Machinery) 16800
Liquidation Cr. 16800
(Contra-assets transferred to Liquidation Account)
Cash A/c Dr. 2412000
Liquidation A/c Cr. 2412000
(Assets sold for cash except land and building at the amount
Realised at completion of winding up) (Note 1)
Liquidation A/c Dr. 9120
Accounts Payable Cr. 3600
Salary and Wages Cr. 1680
Accrued Interest on mortgage Cr. 2400
Accrued Interest on Debenture Cr. 1440
(Unrecorded liabilities recorded in liquidation account)

Accounts Payable A/c Dr. 2400
Liquidation A/c Cr.
2400
(Discount allowed by creditors)
Mortgage Loan A/c Dr 81600
Accrued Interest A/c Dr. 2400
Cash A/c Dr 6000 (90000-84000)
Accumulated depreciation on Building Dr. 36000
Liquidation A/c Cr. ( Loss on sale) 19200
Land & Building Cr.
145200
(37200+108000
(Sale of land & Building by mortgage loan and
return of funds to liquidator (Clarke and Dean, 2014)) (note 1)
Calls in arrear A/c Dr 16000
Share Capital A/c Cr.
16000
(Call made on B ordinary shares)
Cash A/c Dr. 16000
Call in arrear A/c Cr.
16000
(Being full cash received on calls in arrear)
Liquidation Expenses A/c Dr. 960
Debenture A/c Dr. 34650
Accrued Interest on debenture A/c Dr. 1440
Arrear on dividend 14400
Liquidation Remuneration A/c Dr. 4800
Salary & Wages Payable A/c Dr 1680

Accounts Payable A/c Dr 105600
Income Tax Payable A/c Dr 4800
Cash A/c Cr. 1
68330
(Liabilities paid in priority order)
Preference Shares 60000
Share Capital A Ordinary Shares A/c Dr 108000
Share Capital B 58000
Share Holder Distribution A/c
226000
(Transfer share capital account to shareholder’s account)
Liquidation A/c Dr. 26640
Retained Earnings Ac Cr.
14640
General Reserve A/c Cr.
12000
(Transfer of retain earnings to Liquidation account) (Note 2)
Shareholders Distribution A/c Dr 159840
Liquidation A/c Cr
159840
(Being deficiency transferred to liquidation A/c)
Shareholders Distribution A/c Dr 99300
Cash A/c Cr.
99300
(Final payment to shareholders as per schedule) (Note 3)

Note 1
Actual amount realised at sale of assets:
Inventories $112800
Plant and Equipment $52800
Bills receivable $33600
Accounts Receivable $42000
Total $241200
Note2
Liquidation
Particular Amount in
$
Particular Amount in $
Plant & Equipment (net of
depreciation)
81600 Cash (sale of assets) 241200
Bills Receivable 57600 Balance c/d (loss on
liquidation)
Accounts Receivable 69600 133200
Inventory 146400
Loss on sale of Land &
Building
19200
374400 374400
Balance b/d 133200
General Reserve 12000
Retained Earnings 14640 Balance c/d (deficiency) 159840
159840 159840
Note 3

It has been assumed that amount has been returned to liquidator after reducing unrecorded
accrued interest on mortgage loan as well as principal amount of mortgage loan (Dagwell,
Wines and Lambert, 2015).
FINAL DISTRIBUTION TO SHAREHOLDERS
PartiCULAR No. of Shares Paid Notional
Call
Notional
Refund
(.400
cents)
Actual
Refund
Defeceincy
Share
12 %
Preference
Share
50000 60000 20000 20000 40000
A Ordinary
SHares
90000 108000 36000 36000 54000
B Ordinary
Shares
100000 60000 40000 40070 19930 79930
Total 240000 228000 40000
Balance of
Cash b/d
80070
Calls in arrear 16000
Total 96070
Cash Available 96070
TOTAL
DEFECIENCY
159840
Total Notional
Cash per share
=96070/240000
=.400 cents
LIQUIDATION ACCOUNT
Particular Amount in
$
Particular Amount in $
Plant & Equipment (net of 81600 Cash (sale of assets) 241200