Mohan Ltd. went into voluntary Liquidation on 31st December, 2018 when the following Balance Sheet was prepared: Particulars Amount (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital : 2,000, 6% Pref

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2021
Mohan Ltd. went into voluntary Liquidation on 31st December, 2018 when the following Balance Sheet was prepared: Particulars Amount (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital : 2,000, 6% Preference Shares of ₹100 each 2,00,000 4,000 Equity Shares of ₹100 each fully paid 4,00,000 6,000 Equity Shares of ₹100 each ₹50 paid 3,00,000 (b) Reserves and Surplus Profit & Loss A/c (Dr Balance) (2,00,000) (2) Non-Current Liabilities: 6% Debentures Secured by a floating charge on all Assets 2,00,000 Mortgage Loan on Land and Building 2,00,000 (3) Current Liabilities : Sundry Creditors 1,80,000 Income-Tax 20,000 Total 13,00,000 II. ASSETS (1) Non-Current Assets : (a) Tangible Fixed Assets: Land and Building 4,00,000 Plant and Machinery 4,40,000 (2) Current Assets Stock 2,00,000 Debtors 2,00,000 Cash at Bank 60,000 Total 13,00,000 Preference Shares dividend were in arrear for three years and the arrears are payable on liquidation. The assets were realised as follows: Land and Building ₹4,80,000; Plant and Machinery ₹3,60,000; Stock ₹1,40,000; Debtors ₹1,20,000. The expenses of liquidation amounted to ₹16,000. The liquidator is entitled to a commission at 2% on all assets realised except cash and 3% on amounts distributed to unsecured creditors. All payments were made on 30th June, 2019. Show the Liquidator's Final Statement of Account.

Answer & Explanation:

Mohan Ltd. (In Liquidation) Liquidator's Statement of Account for the period 1st January to 30th June, 2019 Receipts Amount (₹) Payments Amount (₹) Cash at Bank 60,000 Liquidation Expenses 16,000 Assets Realised Liquidator's Remuneration 28,000 Sundry Debtors 1,20,000 Stock-in-Trade 1,40,000 Plant and Machinery 3,60,000 Surplus from Land & Building (₹4,80,000 - ₹2,00,000) 2,80,000 Debenture holders Principal 2,00,000 Interest up to 30.06.2019 6,000 2,06,000 Creditors: Preferential 20,000 Unsecured 1,80,000 Return to Contributories Preference Shareholders Capital 2,00,000 Arrears of preference dividend 36,000 Equity Shareholders @₹57.40 on 4000 shares 2,29,600 @₹7.40 on 6000 shares 44,400 Total 9,60,000 Total 9,60,000 Working Notes: (1) Liquidator's Remuneration 2% on ₹11,00,000 realised = ₹22,000 3% on ₹2,00,000 distributed among unsecured creditors = ₹6,000 Total = ₹28,000 (2) Debenture holders are entitled to interest upto the date of payment since the company is solvent. (3) Preference dividend is payable for three years (₹2,00,000 * 6% * 3) = ₹36,000 (4) Amount Payable to Equity Shareholders Balance available after payment to preference shareholders = ₹2,74,000 Add: Notional payment by equity shareholders @₹50 on 6000 shares = ₹3,00,000 Amount Available = ₹5,74,000 Refund to each shareholders (₹5,74,000 / 10000) = ₹57.40 Amount Payable for partly paid-up shares (₹57.40 - ₹50) = ₹7.40 Note: It is assumed that liquidator will get remuneration @ 3% on payment made to unsecured creditors only (excluding Preferential Creditors) The liquidators remuneration is calculated on 2% on All Assets realized i.e. ₹11,00,000 i.e. considering full value of land and building realized before payment of Mortgage loan of ₹2,00,000 on Land and Building. Another view may be to calculate on all net assets realized i.e. ₹9,00,000 i.e. considering Net value of land and building realized after payment of Mortgage loan of ₹2,00,000 on Land and Building.

Topics: Company Accounts

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic