Ledger accounts for liquidation   LO9 Hornet Ltd went into voluntary liquidation on 1 January 2021, at which date the statement of financial position was as shown below. HORNET LTD Statement of financial position as at 1 January 2021 Liabilities and equity Assets Share capital: Land and buildings (net) $250 000 400 000 ordinary shares fully paid $460 000 Plant (net) 400 000 Retained earnings 10 000 Fixed deposit 10 000 Mortgage loan 150 000 Accounts receivable 98 000 Debentures 100 000 Investments 50 000 Bank overdraft 80 000 Inventories 120 000 Accounts payable 80 000 Other payables 48 000 $928 000 $928 000 Additional information

(a) Creditors were called on to prove their debts. The liquidator discovered the following. • Debenture interest of $7500 was due on 1 January 2021. • The Grasshopper Bank holds a mortgage over the plant as security against the overdraft; as the bank has waived its right to seize the plant, the liquidator has undertaken to sell the asset and repay the overdraft. • The mortgage loan is secured over land and buildings; the mortgagee has decided to sell the assets to recover the amount owing. • The debentures are secured by a circulating security interest over inventories. • Other payables comprise loans from directors, made on 1 December 2020.

(b) Assets realised the following amounts. Land and buildings $ 400 000 Less: Rates and selling expenses (16 000) Less: Mortgage loan (150 000) $234 000 Plant and equipment 390 000 Fixed deposit 12 000 Accounts receivable 90 000 Investments 30 000 Inventories 100 000 $856 000

(c) The liquidator made the following payments. Debentures $100 000 Debenture interest 7 500 Bank overdraft 80 000 Accounts payable (in full settlement) 76 000 Other payables 48 000 Additional amounts not recorded in the records: Liquidator’s remuneration 25 000 Liquidation expenses 11 000 Holiday pay — employee 4 000 Retrenchment payment — employee 10 000 Income tax penalty 3 000 $364 500 Required 1. Prepare the liquidation account. 2. Prepare the liquidator’s receipts and payments. 3. Prepare the shareholders’ distribution account.