Journal entries, given a report as to affairs   LO9 At 31 July 2020, the liquidator of Ladybird Ltd, who had been appointed by the court, prepared the report as to affairs shown below. LADYBIRD LTD Report as to affairs as at 31 July 2020 Valuation Estimated realisable value (1) Assets not specifically charged: Interest in land — — Sundry debtors $ 58 000 $ 36 000 Cash on hand — — Cash at bank 1 000 1 000 Inventories 122 000 94 000 Work‐in‐progress — — Plant and equipment at cost/value 82 000 44 000 Other assets — bills receivable 48 000 28 000 311 000 203 000 (2) Assets subject to specific charge: Land and buildings 91 000 80 000 Less: Amounts owing (mortgage) (70 000) (70 000) 21 000 10 000 $ 332 000 $213 000 Total estimated realisable value $213 000 (3) Less: Preferential creditors entitled to priority over floating charge: claims by employees — salaries and wages (1 400) 211 600 (4) Less: Amounts owing and secured by floating charge — debentures (30 000) (5) Less: Preferential creditors — 181 600 (6) Balances owing to unsecured creditors: Trade creditors (93 000) Income tax payable (4 000) (97 000) Estimated surplus subject to liquidation expenses $ 84 600 Share capital Issued: 90 000 ordinary shares fully paid $125 000 50 000 6% preference shares, fully paid 50 000 Total share capital $175 000 Retained earnings $ 19 000Cr Additional information

(a) Accumulated depreciation on plant and equipment was recorded at $14 000.

(b) Arrears of cumulative preference dividend totalled $12 000. The constitution gives the preference shareholders priority of payment of arrears of preference dividends. All shares rank equally per share as to return of capital.

(c) Of the $93 000 trade creditors recognised by the liquidator, Ladybird Ltd had not recorded $3000. Further, Ladybird Ltd had not recorded unpaid salaries and wages amounting to $1400.

(d) At the completion of the winding up, the following additional information was available. • Interest accrued on mortgage was $2000, and on debentures $1200. • Liquidation expenses were $800, and liquidator’s remuneration was $4000. • No bill receivable was dishonoured. • All other creditors were paid the amounts reported in the report as to affairs. • Land and buildings realised $75 000. • All other assets realised the amounts estimated.

(e) In relation to the land and buildings, the mortgagee sold the assets and remitted to the liquidator any amount in excess of the debt due. Required Prepare the journal entries in Ladybird Ltd to wind up the company. (Show calculations for the distribution of cash to shareholders.)