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Accounting for Companies – II

notes 10.3 liquidators’ statement of account

The statement prepared by the liquidator showing receipts and payments of cash in case of
voluntary winding up is called “Liquidators’ statement of account” (Form No. 156 Rule 329 of
the Companies Act, 1956). There is no double entry involved in the preparation of liquidator’s
statement of account. It is only a statement though presented in the form of an account.
While preparing the liquidator’s statement of account, receipts are shown in the following
order:

(a) Amount realised from assets are included in the prescribed order.
(b) In case of assets specifically pledged in favour of creditors, only the surplus from it, if any,
is entered as ‘surplus from securities’.
(c) In case of partly paid up shares, the equity shareholders should be called up to pay
necessary amount (not exceeding the amount of uncalled capital) if creditors’ claims/
claims of preference shareholders can’t be satisfied with the available amount. Preference
shareholders would be called upon to contribute (not exceeding the amount as yet uncalled
on the shares) for paying of creditors.

(d) Amounts received from calls to contributories made at the time of winding up are shown
on the Receipts side.
(e) Receipts per Trading Account are also included on the Receipts side.
Payments made to redeem securities and cost of execution and payments per Trading Account
are deducted from total receipts.
Payments are made and shown in the following order:
(a) Legal charges;

(b) Liquidator’s expenses;
(c) Debenture holders (including interest up to the date of winding up if the company is
insolvent and to the date of payment if it is solvent);
(d) Creditors:

(i) Preferential (in actual practice, preferential creditors are paid before debenture
holders having a floating charge);
(ii) Unsecured creditors;
(e) Preferential shareholders (Arrears of dividends on cumulative preference shares should be
paid up to the date of commencement of winding up); and
(f) Equity shareholders.

10.3.1 preparation of liquidator’s final statement account

The liquidator’s main job is to collect the assets of the company and realise them, surplus, if
any, from the securities held by the fully secured creditors and proceeds from the partly paid
up contributories and distribute the amounts among the various right claimants. This amount
is distributed by the liquidator strictly in the prescribed order of payment. For this purpose, he
prepares a cash book for recording the receipts and payments. In the case of compulsory winding
up, he is required to submit an abstract of cash book to the court and in the case of voluntary
winding up to the company. On the completion of winding up, he prepares a statement known as
Liquidator’s Final Statement of Account which he has to submit. This account must be prepared
according to the prescribed Form No. 156 of the Companies Act, 1956. This prescribed form is
given below:

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