Butterfly Ltd, a company based in Australia, went into liquidation under a court order on 23 May 2021. The Statement of Financial Position of Butterfly Ltd is presented below. Butterfly Ltd Statement of Financial Position As at 23 May 2021 $ $ Assets Freehold property 20 000 Plant and machinery 61 000 Less: Accumulated depreciation plant and machinery (22 000) 39 000 Goodwill 5 000 Trade and other receivables 31 800 Inventories 18 200 114 000 Liabilities Accounts payable 35 000 Current tax payable 10 000 Accrued liabilities 2 150 Bank overdraft (secured by non-circulating interest on freehold property) 8 000 15% debentures (secured by circulating interest) 12 000 67 150 Net assets 46 850 Equity 14 000 10% preference shares fully paid at $1 14 000 20 000 A ordinary shares paid to $1.55 (issued for $2) 31 000 10 000 B ordinary shares issued for $1 (called to $0.75) 7 500 Less: Calls in arrears 2 000 shares at $0.25 (500) 7 000 52 000 Retained earnings (5 150) 46 850

Question 3 Butterfly Ltd (contd.) Additional information: (a) The liquidator was able to receive the following amounts for assets: Plant and machinery $ 8 000 Goodwill $ - Trade and other receivables $ 22 000 Inventories $ 17 000 (b) The freehold property was sold by the bank from which Butterfly Ltd secured the bank overdraft for $30 000 and, after settlement of local government rates, and the bank overdraft, the remainder was transferred to the liquidator. (c) Accounts payable were prepared to settle their claims at a discounted amount of $11 950. (d) The item Accrued liabilities in the financial statements of Butterfly Ltd included: Local government rates payable $ 500 Directors fees payable $ 400 GST payable $ 250 Rent payable $ 150 Accrued utilities payable $ 250 Wages payable $ 250 Other payables $ 350 $ 2 150 (e) Unrecorded liabilities included arrears of preference dividends of $1 500, liquidation expenses, $700, and liquidation fee of $1200. The constitution of the company states that arrears of dividends are to be paid in the event of liquidation. All shares are to rank equally, based on the number of shares held, in distributing any surplus or deficiency. (f) The liquidator forfeited all B ordinary shares on which calls were unpaid. (g) After meeting all liabilities and expenses, the liquidator will distribute the remaining balance to shareholders on 30 August 2021. Required: Show all workings. Prepare the Liquidation account, the Liquidators Cash account and the Shareholders Distribution account (in T format) for Butterfly Ltd as at 23 May 2021. Determine the gain or loss on liquidation accordingly