Page 218 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 10: Liquidation of Companies: Preparation of Accounts

of assets including cash and 2% on the amount paid to unsecured creditors. Creditors shown in notes
the Balance Sheet included ` 1,000 preferential creditors. Interest on debentures is to be paid up
to 31st May, 2010. Dividend on Preference Shares is in arrear for 1½ years. Arrear of dividend
should be paid before payment of capital to equity shareholders as per Articles of Association.
Legal charges are ` 500. According to Articles of Association, at the time of winding disparity
among equity shareholders (if any) will be removed first at the time of repayment of capital.

Solution

ram mohan company ltd.
liquidator’s final statement of account
receipts estimated value payments amount
value realised (`)
(`) (`)
Assets Realised: Legal Charges 1,000
Buildings 4,00,000 3,50,000 Liquidator’s Remuneration:
Machinery 1,60,000 2,00,000 `
Debtors 6,40,000 6,00,000 1½ on ` 16,62,000 24,930
Stock 4,00,000 4,61,000 2% on ` 10,000 200 25,130
Cash 51,000 51,000 Cost of Liquidation 2,000
Debentures 12,84,000
Unsecured Creditors 10,000
Return to Contributories:
7% Pref. Shareholders 3,00,000
Preference Dividend (arrears of 1½ year) 31,500
Equity Shareholders (6,000 shares
@ ` 1.263 approx. per share) 7,580
Equity Shareholders (3,000 shares
@ ` 0.263 approx. per share) 790
16,51,000 16,62,000 16,62,000
Working Note:
(1) Unsecured Creditors include B/P, Creditors and Preferential Creditors ` (2000 + 7000 +
1000 = 10,000)

×
10,000 2
(2) Liquidator’s commission on Unsecured Creditors = = 200
100
(3) As debenture-holders are being paid off on 31 May, 2010, they are entitled to get two
st
12,00,000 6 ×2
months’ extra interest i.e., April & May= × = 12,000
100 12
Amounted due to debenture-holders = ` 12,00,000 + 72,000 + 12,000 = 12,84,000.
(4) Amount left after the payment of Preference Shareholders’ Capital and their dividend.
` 16,62,000 – (1,000 + 25,130 + 2,000 + 12,84,000 + 10,000 + 3,00,000 + 31,500) = ` 8,370 From
this amount of ` 8,370, first of all 6000 equity shareholders will get ` 1 because they have
paid ` 1 more. That will be ` 6,000. Thus amount left ` 8,370 – ` 6,000 = ` 2,370. Now, this
amount of ` 2,370 will be divided in the ratio of 6000:3000 i.e., ` 1,580: ` 790.

lovely professional university 213