Caps Ltd Liquidation: Accounting Entries, Report & Distribution

This assignment solution details the liquidation process for Caps Limited, encompassing the preparation of a report on the company's affairs as of June 30, 2018, journal entries to wind up the company, and a clear demonstration of the order of priority for payments to creditors. It includes detailed workings for the final distribution to shareholders, along with the preparation of the Liquidation Account, Shareholders' Distribution Account, and Liquidator's Cash Account, ensuring all relevant details are included in the account entries. The solution covers the estimated realizable value of assets, liquidation expenses, preferential creditors, debenture holders, unsecured creditors, and the final surplus distribution to both preference and equity shareholders.

Liquidation
Liquidation
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Liquidation
Table of Contents
Solution: 1...................................................................................................................................................3
Solution: 2...................................................................................................................................................4
Solution: 3...................................................................................................................................................5
Solution: 4...................................................................................................................................................6
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Liquidation
Solution: 1
Report as to Affairs
Particulars
Estimated
Realisable
Value
Assets not specially pledged
Plant & Equipment 95000
Cash 46000
Accounts Receivable
11600
0
Inventory
20400
0
Bills Receivable 72000
Calls in Arrear 18000 551000
Estimated Surplus from the Assets pledged (W.N. 1) 55000
Estimated Total Asset Available for Prefential
Creditor, Debenture Holder & Unsecured Creditors 606000
Less: Liqudator Remuneration & Expenses 12400
Less: Prefential Creditors 20000
Less: Debenturholders Secured by Circulating Charge 57600
Less: Interest on Debenture 3000 93000
Estimated surplus for Unsecured Creditors 513000
Less: Unsecured Creditors
18000
0
Creditors not recorded 8000
Discount on Settlement -6000
Salaries & wages not recorded 6000
Income Tax payable 8000 196000
Estimated surplus for Shareholders 317000
Preference Shares 120000
Estimated Surplus as regards to Equity Shareholders 197000
W.N.-1: Estimated Surplus from the Assets
pledged
Estimated Realisable Value of Land &
Building
26000
0
Due to Secured Mortgage
20000
0
Interest on Mortgage 5000
Estimated Surplus from the Assets 55000
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Liquidation
pledged
Solution: 2
Journal Entries in the books of Caps Limited
Particulars Debit Credit
Liquidator's Cash Account Dr.
60600
0
To Plant & Equipment 95000
To Cash 46000
To Accounts Receivable
11600
0
To Inventory
20400
0
To Bills Receivable 72000
TO CALLES IN ARREAR 18000
TO REALIZATION FROM ASSETS PLEDGED 55000
Being Assets sold for liquidation.
Liquidation A/c Dr.
60600
0
To Liquidator's Cash Account
60600
0
Being Liquidator's Cash Transfer to liquidation account for further payment.
Liqudator Remuneration & Expenses Dr. 12400
Prefential Creditors Dr. 20000
Debenturholders Secured by Circulating Charge Dr. 57600
Interest on Debenture Dr. 3000
Unsecured Creditors Dr.
18200
0
Salaries & Wages Dr. 6000
Income Tax Payable Dr. 8000
Shareholders Distribution Account Dr.
31700
0
To Liquidation A/c
60600
0
Being Payment made sequentially to Creditors.
Preference Share Holders Dr.
12000
0
Equity Share Holders Dr.
19700
0
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Liquidation
To Shareholders Distribution Account
31700
0
Being remaining surplus transfer to shareholders account.
Solution: 3
LIQUIDATOR'S CASH ACCOUNT
DEBIT
AMOU
NT CREDIT
AMOU
NT
TO ASSETS REALISED By Liquidation Account 606000
Plant & Equipment 95000
Cash 46000
Accounts Receivable 116000
Inventory 204000
Bills Receivable 72000
TO CALLES IN ARREAR 18000
TO REALIZATION FROM
ASSETS PLEDGED 55000
TOTAL 606000 TOTAL 606000
LIQUIDATION ACCOUNT
DEBIT
AMOU
NT CREDIT
AMOU
NT
TO LIQUIDATOR'S Cash
Account 606000
By Liqudator Remuneration &
Expenses 12400
By Prefential Creditors 20000
By Debenturholders Secured by
Circulating Charge 57600
By Interest on Debenture 3000
By Unsecured Creditors 182000
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Liquidation
By Salaries & Wages 6000
By Income Tax Payable 8000
By Shareholders Distribution
Account 317000
TOTAL 606000 TOTAL 606000
SHAREHOLDERS DISTRIBUTION ACCOUNT
DEBIT
AMOU
NT CREDIT
AMOU
NT
TO LIQUIDATION ACCOUNT 317000 By Preference Share Holders 120000
By Equity Share Holders 197000
TOTAL 317000 TOTAL 317000
Solution: 4
Particulars
Amoun
t
Estimated surplus for Shareholders 317000
Preference Shares 120000
Estimated Surplus as regards to Equity
Shareholders 197000
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