5. LIQUIDATION OF COMPANIES

Size: px

Start display at page:

Download "5. LIQUIDATION OF COMPANIES"

Andra Elliott
5 years ago
Views:

1 5. LIQUIDATION OF COMPANIES Gross Liabilities 20,00,000 3,00,000 SOLUTIONS TO ASSIGNMENT PROBLEMS Problem No. 1 Statement of Affairs of A Ltd. (in Liquidation) as at 30 th September, ,00,000 70,00,000 2,00,000 Assets not specifically pledged (as per List A): Other Fixed Assets Current Assets Estimated Realisable Value (Rs.) 36,00,000 70,00,000 Total 1,06,00,000 Assets specifically pledged (as per List B): Land & Building Estimated Realizable Value Due to Secured Creditors Deficiency Ranking as Unsecured Surplus Carried to the last column Rs. Rs. Rs. Rs. 22,00,000 20,00,000 2,00,000 2,00,000 Estimated total assets available for preferential creditors debenture holder secured by a floating charge and unsecured creditors 1,08,00,000 Summary of Gross Assets: Gross realizable value of assets specifically pledged Other Assets 22,00,000 1,06,00,000 Total Assets 1,28,00,000 Liabilities Liabilities Secured creditors (as per List B) to the extent to which claims are estimated to be covered by assets specifically pledged Preferential creditors (as per List C) for demand of excise duty Balance of assets available for debenture holders secured by floating charge and unsecured creditors Debenture holders secured by floating charge (as per List D) Unsecured creditors (as per List E): Unsecured Loans Trade creditors Liability for bills discounted (Contingent) 1,35,00,000 Estimated deficiency as regards creditors (difference between gross assets and gross liabilities) 3,00,000 1,05,00,000 40,00,000 70,00,000 2,00,000 7,00,000 Issued and called up capital: 5,00,000 Equity shares of Rs.10 each (as per List G) 50,00,000 Estimated deficiency as regards members/ contributories 57,00,000 Copy Rights Reserved To, Guntur IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 1

2 Ph: /26 Problem No. 2 Prakash Processors Limited Liquidator s Statement of Account To Assets realised Bank 75,000 By Liquidation expenses 27,250 Other assets: By Liquidator s Remuneration Land etc. 3,00,000 By Debenture holders: Machinery etc. 5,00,000 Debentures 2,50,000 Patents 75,000 Interest accrued 37,500 Stock 1,50,000 Interest 1111/ ,750 3,06,250 Trade receivables 2,00,000 12,25,000 By Preferential creditors 38,000 To Call on equity share holders (7,500 x Rs.2.65) (1) 19,875 By Unsecured creditors 2,80,750 By Preferential shareholders: Working Notes: 3 1. Liquidator s remuneration = 12,25,000 x = Rs.36, Preference capital 5,00,000 Arrear of Dividend 1,00,000 6,00,000 By Equity share holders Rs on 2,500 shares 30,875 13,19,875 13,19, As the company is solvent, interest on the debentures will have to be paid for the period to = 2,50,000 x x x = Rs.18, Particulars Amount Total equity capital paid up 6,37,500 Less: Balance available after payment to unsecured and preference shares 11,000 (13,00,000 12,89,000) Loss to be borne by 10,000 equity shares 6,26,500 Loss per share Hence, amount of call on Rs.60 paid share 2.65 Refund to share on Rs.75 paid Copy Rights Reserved To, Guntur IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 2

3 Problem No. 3 Dr. Liquidator s final statement of Account Cr. To amount realised By legal charges 780 from assets not specifically pledged: Furniture 7,800 By Liquidation expenses 650 Debtors (W.N 1) 1,03,025 By Liquidator s remuneration 6,500 SV of LIP received from 15,015 By Preferential creditors: a debtors (15,600585) Cash at bank 11,700 1,37,540 Income tax (200001) 14,300 To amount realised Salaries of employees 10,640 24,940 from assets specifically pledged (15,590 4,950) To amount received from contributories (6,500 2,600)5 19,500 By creditors with floating charges: 14% Debentures 26,000 By unsecured 98, (W.N3) 1,57,040 1,57,040 W.N.1: Sundry Debtors Rs.1,04,000 W.N.2: Basis Ltd other debtors ,500 (975) , ,500 = 1,03,025 Sundry trade creditors Rs.1,07,000 W.N.3: Unsecured creditors One of the creditors other creditors 13,000 94,000 (1625) 11,375 11, ,000 = 1,05,375 Particulars Amount Income tax for ,250 MD s Salary 4,950 Loan from bank 39,000 Trade creditors (W.N2) 1,05,375 Salaries in lieu of notice 2,730 1,55,305 98,170 / 1,55,305 = IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 3

4 Ph: /26 Problem No. 4 M. Ltd. (in liquidation) Liquidator s Statement of Account from 1 st January, 2011 to 30 th June, 2011 Particulars Amount Amount Particulars Amount Amount Balance at bank 74,000 Liquidator s remuneration 7302* (3% on Rs.2,43,398) Realisation from: Liquidation Expenses 3,000 Sundry Debtors 52,000 Loan on mortgage with Accrued interest** M Ltd. Rs.1,40,000 6% Debentures Creditors including Outstanding Expenses 1,42,800 Return contributors: 6% Preference shareholders Rs.10 per share Cash 2,62,200 4,05,000 6% Debentures Cash (03 P. approx..) 6 months interest on debentures Less: Cost of Collection of Debts 1,42,800 2,04,000 75,500 1,00,000 4,200 per share 598 1,43,398 5,35,200 2,000 5,33,200 5,33,200 * 3/103 x 2,50,700 (i.e. Rs.5,32,000 less payments made to all creditors) ** It is assumed that loan is secured by a floating charge (i) Problem No.5 Liquidator s Statement of Account Particulars Amount Particulars Amount To Assets realized (20,00,000+3,20,000) To Receipt of call money on 29,000 equity 2 per share 23,20,000 58,000 By Liquidator s remuneration 2.5% on 23,20,000* 58,000 2% on 50,000 1,000 85,255 2% on 13,12,745 (W.N.3) 26,255 By Liquidation Expenses 10,000 By secured creditors By Debenture holder having a floating charge on all assets 6,00,000 By Preferential creditors 50,000 By Unsecured creditors 13,12,745 23,78,000 23,78,000 * Total assets realised = Rs.20,00,000 + Rs.3,20,000 = Rs.23,20,000 (ii) Percentage of amount paid to unsecured creditors to total unsecured creditors 13,12,745 = x100 = 71.73% 18,30,000 IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 4

5 Working Notes: 1. Unsecured portion in partly secured creditors = Rs.3,50,000 Rs.3,20,000 = Rs.30, Total unsecured creditors = 18,00, ,000 (W.N.1) = Rs.18,30, Liquidator s remuneration on payment to unsecured creditors Cash available for unsecured creditors after all payments including payment to preferential creditors & liquidator s remuneration on it = Rs.13,39,000 [20,58,00058,0001,00010,000 6,00,00050,000] 2 Liquidator s remuneration on unsecured creditors = x13,39,000= Rs.26, 255 or on = x13,12,754 = Rs.26, PROBLEM NO. 6 Statement of liabilities of B List Contributories Creditors outstanding on the date of transfer (ceasing to be member) Q R S T No. of shares 1,200 1, Amount to be paid to creditor Date Rs. Rs. Rs. Rs. Rs. Rs ,000 1,500 1,875 1, , ,200 5,000 4,200 2,250 1, ,200 10, ,200 1, ,300 11, , * Total (a) 11,000 1,500 4,125 3,000 2,375 10,625 Maximum liability on shares held (b) Amount paid (a) and (b) whichever is lower 4,800 6,000 3,200 2,000 1,500 4,125 3,000 2,000 Working Note: P will not be liable since he transferred his shares prior to one year preceding the date of winding up. The amount of Rs.5,000 outstanding on 15 th May, 2010 will have to contributed by Q, R, S and T in the ratio of number of shares held by them, i.e. in the ratio of 12:15:8:5; thus Q will have to contribute Rs.1,500; R Rs.1,875; S Rs.1,000; T Rs.625. Similarly, the further debts incurred between 15 th May, 2010 to 18 th September, 2010, viz. Rs.4,200 for which Q is not liable will be contributed by R, S and T in the ratio of 15:8:5. R will have to contribute Rs.2,250, S and T will contribute Rs.1,200 and Rs.750 respectively. The further increase from Rs.9,200 to Rs.10,500 viz. Rs.1,300 occurring between 18 th September and 24 th December will be shared by S and T who will be liable for Rs.800 and Rs.500 respectively. The increase between 24 th December and 12 th March, is solely the responsibility of T. Note: Against T s liability of Rs.2,375, he can be called upon to pay Rs.2,000, the loss of Rs.375 will have to be suffered by creditors. IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 5

6 Ph: /26 Problem No. 7 Receiver s Receipts and Payments Accounts Sundry Assets realised 2,00,000 Costs of the Receiver 2,000 mortgage: Sale Proceeds of land and building Less: Applied to discharge of mortgage loan Preferential payments Creditors paid Taxes raised within 12 months Debentures holders 1,50,000 Principal 1,50,000 26,000 80,000 70,000 Interest for half year 9,750 1,59,750 Surplus transferred to the Liquidator 82,250 2,70,000 2,70,000 Liquidator s Final Statement of Account Particulars Amount Particulars Amount Amount 82,250 Cost of Liquidation 2,800 Receiver Assets Realised 1,00,000 Remuneration to Liquidator 3,000 Call on Contributories: On holder of 5,000 at the rate of Rs.2.17 per share 10,850 Working Note: Call from party paid shares Unsecured Creditors: Trade Directors for payment of Bank O/D Preferential Shareholders: 32,000 Principal 1,00,000 30,000 62,000 Arrears of Dividends 22,000 1,22,000 Equity shareholders: Return of money to contributors to holder of 10,000 shares at 33 paise each 3,300 1,93,100 1,93,100 Particulars Amount Deficit before call from Equity Shares (1,82,250 1,89,800) 7,550 Notional call on 5,000 Rs.2.50 each 12,500 Net balance after notional call 4,950 No. of shares deemed fully paid 15,000 Refund on fully paid shares 4,950 33p 15,000 Calls on party paid share ( ) 2.17 IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 6

7 Problem No. 8 Receiver s Receipts and Payments Account Sundry Assets realized Mortgage loan : Sale Proceeds of land and building Less: Applied to discharge mortgage loan 1,60,000 (70,000) 2,00,000 90,000 2,90,000 Costs of the Receiver Preferential payments: Income Taxes (raised within 12 months) Debentures holders : Principal amount Interest for half year Surplus transferred to the Liquidator 1,50,000 9,750 Liquidator s Final Statement of Account Receipts Amount Payments Amount Receiver Assets Realised Calls on Contributories : On holder of 5,000 Equity Shares at the rate of ` 1.38 per share 1,03,300 1,50,000 6,900 2,60,200 Cost of Liquidation Remuneration to Liquidator (1,50,000 x 2%) Unsecured Creditors : Trade 38,000 Directors for Bank O/D cleared 30,000 Preferential Shareholders: Capital 1,50,000 Arrears of Dividends 30,000 Equity shareholders: Return of money to holders of 10,000 equity shares at 62 paise each 1,950 25,000 1,59,750 1,03,300 2,90,000 3,000 3,000 68,000 1,80,000 6,200 2,60,200 Working Note: Call from partly paid shares Deficit before call from Equity Shares Rs. = Rs.(1,03,300+1,50,000) Rs.(3,000+3,000+68,000+1,80,000) = 700 Notional call on 5,000 Rs.2 each 10,000 Net balance after notional call (a) 9,300 No. of shares deemed fully paid (b) 15,000 9,300 Refund on fully paid shares = Rs ,000 Calls on partly paid share (Rs.2 Rs.0.62) = Rs.1.38 THE END IPCC_33e_Accounts_GroupII_Liquidation of Companies_Assignment Solutions 7

THE REGISTRAR-GENERAL S DEPARTMENT THE COMPANIES ACT 1963 (ACT 179) FORM OF STATEMENT OF ASSETS AND LIABILITIES. Pursuant to Section 258

THE REGISTRAR-GENERAL S DEPARTMENT THE COMPANIES ACT 1963 (ACT 179) FORM OF STATEMENT OF ASSETS AND LIABILITIES FORM 19A No. of Company Pursuant to Section 258 INSTRUCTIONS: COMPLETE FORM WITH BLACK INK