A company went into liquidation whose creditors are ₹36,000 which includes ₹6,000 on account of wages of 15 men at ₹100 per month for 4 months immediately before the date of winding up; ₹9,000 being the salaries of 5 emp

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2021
A company went into liquidation whose creditors are ₹36,000 which includes ₹6,000 on account of wages of 15 men at ₹100 per month for 4 months immediately before the date of winding up; ₹9,000 being the salaries of 5 employees at ₹300 per month for the previous 6 months; rent for godown for the last six months amounting to ₹3,000; Income-tax deducted out of Salaries of employees ₹1,000 and Directors fee ₹500. In addition it is estimated that the company would have to pay ₹5,000 as compensation to an employee for injuries suffered by him, which was contingent liability not accepted by the company and not included in the above said creditors figure. Find the amount of Preferential Creditors.

Answer & Explanation:

Calculation of Preferential Creditors Particular Amount (₹) Tax deducted at source on salaries 1,000 Wages (15 men for 4 months @ ₹100 each) 6,000 Salaries (5 employees for 4 months @ ₹300 each) 6,000 Workmen compensation 5,000 Total 18,000 Working Note: Wages or salary for four months must be due within 12 months next proceeding to relevant date. The amount shall not exceed ₹20,000 for every claimant. Director's fees, rent for godown are not included in preferential creditors.

Topics: Company Accounts

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