Page 229 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes self assessment

Choose the correct answer from the following options:
13. A liquidator is entitled to receive remuneration @ 2% of the assets realised and 3% of the
amount distributed among the unsecured creditors. The assets realised ` 25,00,000 against
which liquidations expenses of ` 25,000, Preferential Creditors of ` 75,000 and Secured
Creditors of ` 10,00,000 were paid. Remuneration payable to the liquidator will be:
(a) ` 32,500
(b) ` 30,000

(c) ` 50,000
(d) ` 91,475.
14. The salary of 5 clerks for a period of 9 months before the relevant date was in arrear. If the
salary of each clerk is ` 1,500 per month, the amount to be included in preferential creditors
will be:
(a) ` 67,500
(b) ` 5,000

(c) ` 30,000
(d) None of these.
15. The liquidator of a company is entitled to a remuneration of 3% on the amount distributed
to unsecured creditors. The amount available for distribution to unsecured creditors before
paying liquidator’s remuneration was ` 92,700. The liquidator’s remuneration will be:
(a) ` 2,781
(b) ` 2,700

(c) ` 3,000
(d) None of these.



Case Study How to avoid compulsory liquidation?
rotecta (Plymouth) Limited (a fictional company) is a security company providing
security guards to other businesses. The company has 50 employees. The company
Phas minimal overheads, apart from the “wage cost” of the employees.
The company had four main customers, the largest of which failed leaving Protecta
(Plymouth) Limited with a bad debt of ` 100,000. Since that bad debt was incurred three
months ago the company has recovered its previous level of turnover, but that turnover is
now spread over ten customers.
The cash flow reduction of ` 100,000 caused by the bad debt resulted in Protecta (Plymouth)
Ltd “stretching the due dates” of the payments needed to be made to the company’s
creditors. One of those creditors issued a winding up petition two weeks ago and the court
is to consider whether or not to make a winding up order at a hearing set to take place in
three weeks time.
As soon as they receive the winding up petition the directors of Protecta (Plymouth) Ltd
arrange to see a turn around specialist. Contd...

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