Introduction: Liquidation is a legal procedure by which the corporate life of a company is brought to an end. A Joint Stock Company is a creation of law and can come to an end only through a process of law. A company ceases to exist when it is dissolved. Dissolution of a company means closing down the undertaking or suspending its activities permanently. Meaning of Liquidation: The term liquidation means the termination of the legal existence of a company. It is also known as Winding-up of a company. Modes of Liquidation/ Winding up: A liquidation can take place in any of the following three ways: (i) Compulsory winding up. a) Inability to pay debt b) Compulsory winding up by the court (ii) Voluntary winding up. a) Members’ voluntary winding up; or b) Creditors' voluntary winding up. Winding up subject to supervision of the court. a) Ordinary Resolution b) Special Resolution ( Compulsory winding up: Compulsory winding up is a winding up which is brought about by an order of the court. The court will order for winding up of a company only if a petition for winding up of the company is presented to it by somebody. The petition for winding up may be made by: (1) The company itself; (2) A creditors; (3) A contributory; (4) The Registrar of Companies (5) Alll or any of the above parties; (6) Any person authorised by the Central Government / State Government Grounds for compulsory winding up (Section 433): . Company itself wants to liquidated by the Tribunal (NCLT) . If the company has, by special resolution, resolved that the company be wound upby 2 the court. 3. Ifthe company does not commence its business within a year from its incorporation or suspends its business for a whole year. 4. Company is acting against the interest of INDIA. 5. Company has conducted any fraudulent activities. 6. Default in Filing up the Financial Statements or Annual Returns for 5 preceeding years. 7. If the court is of the opinion that it is just and equitable that the company should be wound up. 8. Ifa default is made in delivering the statutory report to the Registrar of companiesor in holding the statutory meeting of the company. 9. If the number of members falls below seven in case of a public company or below two in case of a private company.10.1f the company is unable to pay its debts. Gi) Voluntary winding up: As the name suggests it is a winding up brought about voluntarily either by the members of the company or by its creditors. When the company is solvent, the decision to wind up the company can be taken by the members themselves without consulting the creditors and such a winding up is called ‘Members! voluntary winding up’. Where the company is wound up voluntarily by the members, the Board of. Types of voluntary winding up: 1. Member’s voluntary winding up: At the tim company ice, able to pay its debts and directors, make 3 declaration to that effect, a Member’s voluntary winding up. e of winding up if the company is solvent it is called 2. Creditor’s voluntary winding up: When the declaration of solvency is not made and filed With the registrar, it may be presumed that the company is insolvent. In that case, the company must call a meeting of its creditors for passing the resolution for winding up. (iii) Winding up Subject to Supervision of the Court: This is actually voluntary winding up but under the supervision of the court. The court interferes or supervises the winding up proceedings when an application for its supervision or interference is made by any of the members or creditors of the company on the ground of some fraud or irregularity in voluntary winding up. In the case of supervisory winding up, the court has full control over the winding up proceedings. Types of Voluntary Winding up subject to supervision of the court. ‘A company can be wound up voluntarily under the supervision of the court: 1) By an ordinary resolution: a) Where the duration of the company was fixed by the articles and the period has expired; and b) Where the articles provided for winding up on the occurrence of any event and the specified event has occurred. 2) By a special resolution: When a resolution is passed by the members in all other cases for voluntary winding up, it must be notified to the public by an advertisement in the official gazette and in newspapers. Contributory: A contributory is any person liable to contribute to the assets of a company in the event of it being wound up and includes any shareholders. Definition of Contributory: According to Section 428 of the Companies Act, a contributory is every person liable to contribute to the assets of a company in the event of its being wound up, and includes the holders of any shares which are fully paid up and also any person alleged to be a contributory. Liquidator: A liquidator is a person who is responsible for settling the affairs of a company that is beingBills receivable Xxx ] a) On Amount Realised or Fixed | | Trade debtors Xxx | Remuneration if any Stock in trade Xxx | b) On amount paid to unsecured | Xxx Land and building Xxx | creditors: Xxx Plant and machinery Xxx | 1. Preferential Creditors Xxx Fumiture and fixtures Xxx | 2. Unsecured Creditors Xxx Patents, trade mark, ete. Xxx | Debenture holders: | Xxx Investments. Xxx | Outstanding interest on Surplus realized from secured Debentures creditors (if any) Xxx | Debentures Xxx Calls in arrears Xxx | Preferential creditors Xxx Amount received from calls on Unsecured creditors shares Xxx | Calls in advance, if any | Xxx Preference shareholders: Arrears of dividend on cumulative preference shares Preference share capital Equity shareholders: | Equity share capital Xxx [xx | t points to be remembered: 1) When a specific asset pledged as security asset is provided as security towards debentures or creditors, the amount realized from the asset pledged will be recorded on the receipt side and on the payment side, the amount payable towards secured creditors will be recorded to the extent of amount due or amount realized by the liquidator: When a specific realized whichever is less. Where the amount realized on the asset pledged is less than the amount duetowards secured creditors, the difference will be treated as unsecured creditors and paid after making payment to preferential creditors. 2) When a specific asset pledged as security against debentures or creditors is realized by debenture holders or creditors: In this case, surplus if any, in the hands of debenture holders or creditors must be treated as receipts and recorded on the receipt side of the statement. However, if the amount received on realization is less than the amount due to debenture holder or creditors, it must be paid after making payment to preferential creditors. (i.e., they must be treated as unsecured creditors) 3) Calls in arrears: Calls in arrears is given in the Balance sheet must be recovered by the liquidator from the concerned shareholders without which repayment of capital on those shares cannot be made. If the amount is not realized, the liquidator can forfeit the shares. 4) Calls on shares: Where the amount available is not sufficient to pay outsideliabilities or preference shareholders, any uncalled amount on equity shares mustbe called to the extent required at the relevant stage of. deficiency.liquidated. A liquidator is a person who is appointed when a company is in the process of winding-up. A liquidator is responsible for collecting all the assets of a company and settling all claims against the company. A liquidator can be appointed by unsecured creditors, shareholders or on a court order. In order to settle the debts and claims of a liquidated firm, a liquidator sells off its assets. A liquidator then collects proceeds of sale to pay the creditors. Any balance amount is further distributed among the shareholders of the liquidated company. Functions of liquidator: The liquidator is required to perform certain functions at the time of liquidation. The main functions are as follows: 1) The primary function of a liquidator is to realize the assets of the company. 2) He has to collect the money due from the contributories. 3) He has to distribute the amount realized from sale of assets and the amount received from contributories in the order of preference as per rule 329 of companies act. 4) He has to maintain and submit the record of receipts and payments of cash to the members in the case of voluntary winding up and the court in the case of compulsory winding up. Liquidator's Final Statement of Accounts As has been stated above, a liquidator has to keep a record of the receipts and payment and submit it to the one who appointed him. He maintains the record in the form of a cash book and the record maintained by him is called the Liquidator's Final Statement of Account. This statement is prepared after the affairs of the company are fully wound up. The liquidator must make payments in the following order: 1) Secured creditors 2) Legal expenses (including liquidation expenses and cost of winding up). 3) Liquidator’s remuneration 4) Payments to debenture holders and other creditors having floating charges on the assets of the company. 5) Payments to preferential creditors 6) Payments to unsecured creditors. 7) Calls in advance, if any. 8) Arrears of dividend on cumulative preference shares. 9) Amount due to preference shareholders. 10) Amount due to equity shareholders. Liquidator's Final Statement of Account should be prepared in the form prescribed by the Companies Act. The form prescribed is given below: Format of Liquidator’s final statement of account Receipts z Payments Sel Cash in hand Xxx | Secured creditors Xxx Cash at bank Xxx | Legal charges (liquidation Xxx Assets realized: expenses or cost of winding up) Marketable securities Xxx_| Liquidator’s remuneration: Xxx, Pei ei ee ee er dts! Deller Tos mate te as5) Legal charges and other expenses on liquidation: Legal expenses aes registration expenses, stamp duty, litigation expense etc. The other expenses on liquidation aneludea cost of liquidation Tike auctioneers and valuers charges, cost of possession, cost of notices in Gazette and newspapers, establishment charges and other incidental charges on liquidation. 6) Liquidator’s remuneration: Normally a fixed amount is paid to liquidator or it is paid as a percentage on assets realized by the liquidator and amount paid tounsecured creditors. a) Where the remuneration is to be paid on assets realized: The following points must be kept in mind: 1, Until otherwise specified for calculating liquidator’s remuneration, “assets realized” means any assets realized by liquidator except cash in hand and cash at bank, because cash in hand and at bank is already in the realized form and no effort is required for realizing it. Surplus received from secured creditors must be considered in calculating liquidator’s remuneration, since the liquidator makes an effort to realize the surplus from secured creditors. 3. When the problem states that remuneration is to be paid as a percentage on “Total amount realized”, then remuneration should be calculated on total receipts (i.e., including surplus, calls-in-arrears and call money received). i b) Where the remuneration is to be paid on payments made to unsecured creditors: 1. For calculating remuneration on payment made to unsecured creditors, preferential creditors must be considered as part of unsecured creditors 2. Where the balance amount available is sufficient enough to pay unsecured creditors completely, liquidator’s remuneration on payment to unsecured creditors will be calculated using the following formula: Where the balance amount available is “not sufficient” enough to pay unsecured creditors we completely, liquidator’s remuneration on payment to unsecured creditors will be calculated using the following formula: 4. Where the liquidator has to be paid remuneration on final amount payable to shareholders, then the amount of remuneration must be calculated using the following formula: 7) When debentures are not secured against a specific asset, it must always be treated as secured on “Mloating charges’. Hence, it must be discharged before makingpayment to preferential creditors, 8) Interest on debentures: An ing i Ir * Any outstanding interest on debentures must be pai. discharging debentures, eee =Interest on debentures and other loans must be paid as follows: 8) the company is solvent, interest must be paid until the date of repayment of loan, b) If the company is insolvent, interest must be paid until the date of winding uponly, irrespective of when the final repayment is made, are considered as 9) Preferentint creditors: Creditors, to whom the following are due, preferential creditors under seetion 530 of the companies act, a) All tayes, cesses, ete, due from the company to the central govt, or a state govt.or to a local authority at the relevant date and having become due and payable, b) Outstanding wages or salaries of any employee, in respect of service rendered tothe company. tion under the Workmen’s compensation act, 1923, inrespect of ©) All sums due as compen death or disablement of any employee of the company. d) All sums due to an employee, from a provident find, pension fund or any otherfund for the Welfare of the employees, maintained by the company 1. Problem on calculation of liquidator’s remuneration: 1, Calculate liquidator’s remuneration and also state the amount paid to unsecuredcreditors. Balance of cash after paying preferential creditors Rs. 4,10,000 Other unsecured creditors Rs. 4,78,000 Liquidator’s remuneration is 3% on the amount paid to unsecured creditors. HL. Problems on Preparation of liquidator’: al statement of acco: 1, Prepare liquidator’s final statement of account from the following information: Secured creditors Rs. 40,000 (securities realised Rs. 50,000) Preferential Creditors Rs. 1,200 Unsecured Creditors Rs. 61,000 Liquidation expenses Rs. 500 The liquidator is entitled to a remuneration of 3% on the amount realised (including securities). Various assets (excluding securities realised) Rs. 52,000 2, ‘A® Ltd. went into voluntary liquidation. Its assets realised by Rs. 4,20,000 excluding amount realised by the sale of securities held by secured creditors From the following, prepare liquidator’s final statement of account: Share eapital: 1,000 shares of Rs. 100 cach Secured creditors Rs. 35,000 (Securities realised Rs, 40,000) Preferential creditors Rs. 6,000 Unsecured creditors Rs. 1,40,000 2,50,000 Debentures (having a floating charge on assets) Rs. Liquidation expenses Rs. 5,000 Liquidato ixed remuneration was Rs. 7,500 and 2% on the amount paid to unsecuredereditors (including preferential creditors) y From the following details, prepare liquidators final statement of account: Assets: Land and building Rs, 6,00,000; Plant and machinery Rs. 3,60,000; 1,20,000; Stock and debtors Rs. 80,000 and Cash Rs, 10,000. Liabilities: Debentures Rs, 8,00,000 and creditors Rs. 4,60,000. The assets other than Land and Buildings realised 10% less, Land and Buildings realised 25% more, Liquidation expenses were Rs. 5,000. Liquidator’s remuneration is 2% on the assets realised (except cash) and 3% onamount distributed to unsecured creditors.. Unfortunate Ltd. went into voluntary liquidation with the following liabilitie: . Vijay Ltd., went into liquidation on 3 1-3-2020, when the state of affairs was as follows: Unsecured creditors was Rs. 8,00,000 including Rs. 1,00,000 preferential claims. Secured creditors secured by Plant and Machinery stood at Rs. 4,00,000. Cash in hand was Rs. 20,000. The liquidator realised plant and machinery for Rs. 3,00,000 and other assets realised Rs. 2,00,000. The liquidation expenses came to Rs. 20,000 and liquidator’s remuneration was fixed at 4% of the amount realised including cash balance and 2%of the amount distributed to unsecured creditors including preferential creditors, Prepare liquidator’s final statement of account. . Ravi Ltd. went into liquidation on 31-3-2020. Following information is available with the liquidation. Creditors amount to Rs. 75,660 of which Rs. 8,000 are preferential, 6% Debentureshaving a floating charge on the assets of the company amounted to Rs. 80,000. Debenture holders to be paid interest upto 30-9-2020. The assets realised as follows: Stock Rs. 84,000; Plant and machinery Rs. 60,600; Cash in hand stood at Rs. 500. Debentures were paid off on 30-9-2020 with interest. Liquidator’s expenses amounting Rs. 1,902 and he is to be given a remuneration at 3% on the amount realised and 2% on the amount distributed to unsecured creditors excluding preferential creditors. Prepare liquidator’s final statement of account. secured creditors Rs. 1,00,000; Preferential creditors Rs. 3,000 and otherunsecured creditors Rs. 1,50,000. The expenses of liquidation amounted to Rs. 1,250. The liquidator is entitled to remuneration at the rate of 3% on all assets realised including the securities held bysecured creditors and 2% on the amounts distributed to unsecured creditors other than the preferential creditors. The various assets realised Rs. 2,10,000 (including Rs. 1,10,000 realised from securities). Prepare the liquidator’s final statement of account. '. Ravi Co. Ltd. went into voluntary liquidation on 31-3-2020 when its position wasas under: Unsecured creditors Rs. 2,00,000 including Rs. 25,000 which is preferential. The creditors secured on plant and machinery stood at Rs. 1,00,000. Cash in hand was Rs. 5,000. The liquidator realised plant and machinery for Rs. 75,000 and the other assets realised Rs. 50,000. The liquidation expenses came to Rs. 5,000 and the liquidator’s remuneration was fixed at 4% of the amount realised including cash balance and 2% of the amount distributed to unsecured creditors excluding preferential creditors. You are required to prepare the liquidator’s final statement of account. . The following particulars relate to Prasad Itd. which went into voluntary liquidation. Preferential creditors Rs. 40,000; Unsecured creditors other than preferential creditors Rs. 3,20,000; Debenture holders Rs. 1,00,000; Assets realized Rs. 3,96,500 and liquidation expenses Rs. 10,000. You are required to prepare Liquidator’s final statement of account allowing for his remuneration at 2% on assets realised and 2% on amount distributed to unsecured creditors including preferential creditors.9. Unlucky Ltd. went into voluntary liquidation. Its assets realised by Rs. 2,10,000 excluding the amount realised by the sale of securities held by secured creditors, From the following prepare liquidator’s final statement of account, Secured creditors 17,500 (security realised Rs. 20,000), preferential creditors Rs. 3,000, unsecured creditors Rs. 1,00,000, Debentures (having floating charges on assets) Rs. 125,000. Liquidation expenses Rs. 2,500. Liquidator remuneration is 3% on amount paid to unsecured creditors. 10.Ali Ltd. went into liquidation on 31-3-2018 with the following liabilities: a) Secured creditors Rs. 2,00,000 (securities realised Rs. 2,50,000) b) Preferential creditors Rs. 6,000 ¢) Unsecured creditors Rs, 3,05,000 The liquidator met liquidation expenses amount to Rs. 2,520. The liquidator entitled for remuneration at 3% on the amount realised including secured asset heldby secured creditors and 1.5% on amount distributed to unsecured creditors, Assets (other than secured asset) realised Rs. 260,000. Prepare liquidator’s final statement of account. 11.The Balance Sheet of Narayan Ltd. as on 31-3-2020 was as follows: [Liabilities Rs. Assets Rs. Paid up capital: [Land and buildings 4,00,000 2,000, 6% _ preference Plant and machinery 4,40,000 share of Rs. 100 each 2,00,000Stock 2,00,000 4,000 equity shares of Sundry Debtors 2,00,000 IRs. 100 each fully paid 4,00,000 (Cash at bank 60,000 (6,000 equity shares of [Profit and loss A/e 2,00,000 Bs 100 each, Rs. 50 3,00,000 paid (6% Debentures 2,00,000 (Floating charges on all assets) lortgage on land and [buildings 2,00,000 Sundry creditors 1,80,000 lIncome tax provision 20,000 15,00,000 15,00,000The company went into liquidation on 1-4-2020. The preference dividends were in arrears for 3 years. The arrears are payable on liquidation. The assets were realised as follows: Land and buildings Rs. 4.80,000; Plant and Machinery Rs. 3,60,000; Stock Rs. 1,40,000; Debtors Rs. 1,20,000 and expenses of liquidation Rs. 16,000. The liquidator is entitled to a commission of 2% on all assets realised and 3% onthe amount distributed to unsecured creditors (including preferential creditors). All the payment made on 30-9-2020. Prepare liquidator’s final statement of account. 12.Ramu Ltd. went into voluntary liquidation on 31-3-2020 when their liabilities andassets were as follow: [ Liabilities Rs. Assets Rs. Issued and subscribed capital: Land and buildings | _5,00,000 10.000. 10% cumulative preference Plant and machinery | 18,12,500 Shares of Rs. 100 each fully paid 10,00,000Patents 2,00,000 5.000 equity shares of Rs. 100 3,75,000 [Stock 2,75,000 each Rs. 75 paid Debtors 5,50,000 [15,000 equity shares of Rs. 100 9,00,000 {Cash at bank 1,50,000 each Rs. 60 paid [15% Debentures secured by 5,00,000 floating charze Interest outstanding on debentures 75,000 ‘Creditors 6,37,500 B4,87,500 34,87,500 Preference dividends were in arrears for 2 years and the creditors included preferential creditors of Rs. 76,000. The assets realised as follows: Land and buildings Rs. 6,00,000; Plant and machinery Rs. 10,00,000; Patents Rs. 1,50,000; Stock Rs. 3,00,000 and Sundry debtors Rs. 4,00,000. The expenses of liquidation amounted to Rs. 54,500. The liquidator is entitled to a commission of 3% on assets realised. Assuming the final payments including those on debentures is made on 30-9-2020. Show liquidator’s final statement of account. 13.Bhavya Ltd., went into voluntary liquidation on 31-3-2019. As at this date, itsBalance sheet was as und Liabilities Rs. Assets Rs. 12% preference shares of Rs. 100 4,00,000 [Freehold property 5,80,000 20,000 equity shares of Rs. 10 each fully paid | 2,00,000|Plant and machinery | 2,90,000 50,000 equity shares of Rs. 10 each Rs. 8 paid } 4,00,000 [Motor vehicles 60,000 2,000 equity shares of Rs. 10 eachRs. 6 paid | 1, g9,9qqStock 1,90,009 1,00,00 [Debtors2,20,000Cash in hand 30,000 (creditors (including secured creditors Protit and loss Ave 1,50,000 fas 60,000 and Preferential Creditors dod) “1400,000 14,00,000 al informatio he preference dividend i 2) The liquidator realises the assets as follows: Freehold prop 0,000; Motor vehicles Rs, 40,000; Stock h sears and is payable on liquidation, y Rs, 7,00,0003 Plant and . 1,75,000 and Debtors Rs. Machinery $0,000, 3) The liquii amounted to Rs, 5,000 and: the liquidator is entitled toa remuneration of 396 on assets realised (excluding cash) and 2% on the amount paid to unsecured creditors including preterentia You are required to prepare liquidator’s final payment per each category of equi jon eXpenses creditors. unl statement of necount and calculate the share, Ltd, went into volunt fon on 31-3-2018 on which date dividends ares Were in arrears for 3 years. Following isthe position of the company. res OF Rs. 100 each, Rs. $0 per share paid up Rs, 3,00,000 100 each fully pai 00,000 y cured creditors Rs, 70,000 liquid 14.Boss Company on preference st Share capital: 6,000 equit 3,000 6% preference sl Liabilities: Secured lo ible Rs, 40,000 Preterential credito Assets realises achinery Rs. 70,000 Other as The liquidation expenses and legal expenses amounted to Rs. 3,000 and Rs. 1,000 respectively. The liquidator is entitled to a remuneration of Rs, 12,000 and a commission at 5% on the amount paid to the preference shareholders as capital and dividend and $% on the total amount of assets realised and also collected by him, Prepare liquidator’s final statement of account. 15.Raj Ltd. went into voluntary liquidation on 30-3-2020 on which date its Balanceshect showed the following figure: Liabilities Rs. [Assets Rs. 250 6% cumulative preference 25,000 Sundry assets 17,00,000 hares of Rs. 100 each fully paid ly p b.4o,000 88 80,000 4,000 equity shares of Rs. 100 each Rs. 60 paid Profit and loss Ale | 4,30,000 8,000 equity shares of Rs. 100 each Rs. 70 paid r00:000 H,00,000 [5% mortgage debentures 85,000 [Creditors [22,10,000 22,10,000Sundry assets realized 70% of their book value. Liquidator is entitled to a remuneration of 3% on assets reali: d excluding cash and 4% on amount distributed to unsecured creditors other than preferential creditors. OF the total creditors Rs. 2,25,000 are secured and Rs. 30,000 is preferential. The preference dividends were in arrears for two years and are payable on liquidation. Liquidation expenses Rs. 35,000. Prepare liquidator’s final statement of account. 16.Luckless Co. went into voluntary liquidation on 31-3-2020. The position of thecompany ‘on that date was as follows: Liabilit Rs. Assets Rs. {5,000 6% cumulative preference [Cand and building 250,000 hares of Rs. 100 each 5,00,000 [Plant and machinery | 6,25,000 12,500 equity shares of Rs. 100 each Patents 1,00,000 IRs. 75 paid up 1,87,500 [Stock 1,37,500 {7,500 equity shares of Rs. 100 each [Debtors 2,75,000 IRs. 60 paid up 4,50,000 [Bank 75,000 5% mortgage debentures 2,50,000 [Profit and loss A/c 3,00,000 lOutstanding debenture interest 12,500 (Creditors 3,62,500 17,62,500 17,62,500 ‘The liquidator is entitled to a commission of 4% on all assets realized except cash and 3% on amount distributed to unsecured creditors. Creditors include Rs. 37,500 for income tax and a loan of Rs. 1,25,000 secured by land and building. Preference di Land and building Rs. 3,00,000; Machinery Rs. 5,00,000; Patents Rs. Rs. 1,50,000; Debtors Rs. 2,00,000. Expenses of liquidation amounted toRs. Prepare liquidator’s final statement of accounts. idend was in arrears for two years. The assets were realized as follows: 75,000; Stock - 27,250. 17.Mask Co. Ltd, went into voluntary liquidation on 31-3-2020. The balance sheet ason that date was as follows: Liabilities Rs. Assets Rs. 4,000 6% preference shares of Rs. 100 each 4,00,000 {Land and building 2,00,00 2,000 equity shares of Rs. 100 each, Rs. 75 paid [1,50,000 [Plant and machinery 5,00,001 6,000 equity shares of Rs. 100 each, Rs. 60 paid 3,60,000 [Patents 80,000, [5% Debentures [2,00,000 Stock at cost 1,10,00 Interest outstanding on debentures 10,000 [Debtors 2,20,000 2,000 equity shares of Rs. 100 each, B,60,000 |Cash at bank 60,000, (Creditors 2,90,000 {Profit and loss A/c 2,40,00( 14,10,000 14,10,000)The preference dividends were In arrears for two yours, Creditors include a loan for ke, 1,00,000 on the mortgage of land and buildings, The assets were realized as follows: Land and buildings Rs. 240,000; Plant and machinery es, 400,000; Matents ba. 60,000; Stock Rs. 1,20,000 and debtors Rs. 160,000, ‘The expenses of Nquidation amounted 10 6s, 21,800. ‘The liquidator is entitled to a commission of 9% on all assets realized excep cash and 2% on the amount paid to unsecured creditors and preferential creditors, Mrsferential creditors amounted to Rs, 30,000, Assume that the payments were made on 409-2020, Prepare the liquidator’s finnl statement of accounts 18.Ramana Ltd, went into voluntary liquidation on 1-4-2021, Nhe details reyardingthe liquidation The liquidator’s remuneration is 3% on assets realized and 2% on amount distributed among, shareholders. Particul _ mount (Cash realized from assets - - 5,00,000 lExpenses of liquidation 9,000 [Unsecured creditors (including outstanding, salaries and wages IRs. 6,000) 66,000 1,500, 14% preferenc es of Rs. 100 cach (3 1-3-2020 paid) 1,50,000 10,000 equity shares of Rs. 10 each Rs. 9 per share paid up 90,000 (General reserves as on 31-3-2021 J,20,000. Profit and loss A/c (Cr.) as on 31-3-2021 20,000 Under the articles of association the prefereni surplus remaining after repayment to equity Prepare liquidator’s final statement of sharcholders have the right to recive 1/3 of harcholders, ount, 19. The following is the Balance Sheet of Rakshith Ltd. as on 31-3-2020 Liabilities Rs. Assets Rs, Paid up capital: Land and building 2,00,000 1,000, 6% preference shares of Plant and IRs. 100 each 100,000 |machinery 2,20,0002,000 equity shares of Rs. 100 each, Stock 1,00,000 fully paid 2,00,000 Debtors 1,00,000 B,000 equity shares of Rs. 100 each, ash at bank 30,000 IRs. 50 paid 1,50,000 Iprorit and loss Ave 1,00,000 \6% Debentures (floating charges on_ |!+00,000 II assets) Mortgage on land and building 1,00,000 \Sundry creditors 90,000 [Income tax 10,000 (7,50,000. 7,50,000 The company went into liquidation on 1-4-2020. The preference dividend were in arrears for 3 years liquidation. The assets were realized as follows: Land and building Rs. 2,40,000; Plant and machinery Rs. 1,80,000; Stock Rs.70,000 and Debtors Rs. 60,000. The expenses of liquidation amounted to Rs. 8,000. The liquidator is entitled to a remuneration at 2% on all assets realized excludingeash at bank and 3% on amount distributed to unsecured creditors. All payments were made on 30-9-2020. Prepare liquidator’s final statement of account. The arrears are payable on 20.The Sundar Co. went into voluntary liquidation on 31-3-2020. On that date, itsBalance sheet was as follows: Liabilities Rs. |Assets Rs. 15,000, 8% preference shares of (Machinery 25,000 Re. 1 each 15,000 |Stock 18,000 {30,000 equity shares 30,000 |Debtors 14,500 (6% Debentures 10,000 [Cash 500 (Creditors 8,000 [Profit and loss A/c 5,000 63,000 63,000, The dividend on preference shares had been paid upto 31-3-2019. In this ease, the preference shares had the right of getting their capital and arrears of dividend, before any amount is paid to equity shareholders. The liquidator sold the stock and machinery for Rs. 36,500 and collected Rs. 14,500 from the debtors. In addition to the creditors mentioned above, he had to pay the preferential creditors by way of taxes to the extent of Rs. 1,000. The liquidation expenses were Rs. 210. The debenture holders were paid on 30-9-2020 along with interest upto this date. 2% on the amount realized by sale of stock and machinery and collection from debtors and 2% on the amount finally paid to the equity shareholders was to be the liquidator’s remuneration. Prepare the liquidator’s final statement of account