| A court order for the winding-up of Slater Ltd was made on 31 March 2020. A statement of financial position prepared on that date was as follows: | SLATER LTD Statement of Financial Position as at 31 March 2020 | | Current assets | | | | Cash at bank | $ 4,000 | | | Cash in hand | 300 | | | Accounts receivable | 46,500 | | | Inventories | 49,500 | | | Total current assets | | $ 100,300 | | Non-current assets | | | | Plant and equipment (at cost less depreciation) | 96,200 | | | Land and buildings (at cost) | 30,000 | | | Goodwill | 39,500 | | | Total non-current assets | | 165,700 | | Total assets | | 266,000 | | Current liabilities | | | | Accounts payable | 29,300 | | | PAYG tax instalments | 5,700 | | | Accrued expenses | 5,000 | | | Total current liabilities | | 40,000 | | Non-current liabilities | | | | 1000 $20 10% debentures | 40,000 | | | 11% mortgage on land and buildings | 20,000 | | | Total non-current liabilities | | 60,000 | | Total liabilities | | 100,000 | | Net assets | | $ 166,000 | | Share capital | | | | 10,000 7% cumulative preference shares issued for $2, called to $1.50 each | $30,000 | | | 50,000 ordinary shares issued for $2, called to $1.50 each | 150,000 | $ 180,000 | | Less: Calls in arrears: 1000 ordinary shares at 50c | | (1,000) | | | | 179,000 | | Reserves | | | | Retained earnings | | (13,000) | | Total equity | | $ 166,000 | | Note: Arrears of preference dividends $2,100. | | | Additional information a. Accrued expenses include: | Interest on mortgage | $ 1,000 | | Interest on debentures | 450 | | Salary (four employees, $888 each) | 3,550 | b. Assets are expected to realise: | Accounts receivable | $ 15,600 | | Inventories | 10,500 | | Plant and equipment | 29,000 | | Unpaid calls | 500 (1000 at 50c) | c. The mortgage holder took possession of the land and buildings and sold them for $60,000, paying any residue to the liquidator. d. The debentures are secured by a floating charge over the assets of Slater Ltd. e. On 1 May 2020, the liquidator realised the assets in (b) for the above amounts. The balance of the unpaid calls was treated as irrecoverable. f. On 1 June 2020 the liquidator paid all liabilities and adjusted the rights of shareholders. The constitution, regarding rights of shareholders in a winding-up, gives preference shareholders a right to receive arrears of dividend. g. Uncalled capital (where required to be called up) proved to be recoverable. h. The winding-up of the company was completed on 1 July 2020, costs of liquidation being $2,800. |
