From the Report as to Affairs, the liquidator also notices the following:

1. The bank overdraft is secured by a floating charge against the Accounts Receivable.

2. Mars Ltd has 5 current directors when it enters into liquidation. Out of the $150,000 wages payable, the total amount of wages owing to all of the five current directors of Mars Ltd is $50,000 (i.e. $10,000 owed to each director). Since one of the company director Leo was only appointed two years ago, there is no long service leave entitlement for Leo. Therefore, out of the $120,000 provision for long service leave, the total long service leave entitlement owing to the remaining four directors amount to $40,000 (i.e. $10,000 owed to each eligible director). The remaining wages payable and long service leave payable are owed to other employees.

3. The mortgage is secured by a security interest against the Land.

4. The constitution of Mars Ltd provides that all shares (including all preference and ordinary

   shares) are ranked equally in winding up.

5. It is expected that all calls in arrears will pay the amount owing to the company should the

   liquidator pursue shareholders for payment.

The liquidator will charge a liquidation fee of $20,000

Required

1. a) Prepare a list of creditors, in strict payment order, showing the order of payment, thename and amount owing prior to any payments from the sale of assets;

2. b) Prepare a General Ledger Account in the running balance format for the Liquidation Account, Receipts and Payments Account, Creditors Control Account and the Members Distribution Account prepared by the Liquidator. Show the complete liquidation process in your ledger accounts.

Mars Ltd went into voluntary liquidation on 1 October 2019. The following information is available from the books of account of Mars Ltd on 1 October 2019. Account Dr ($) Cr ($) Accounts receivable 55,000 Allowance for doubtful debt 5,000 Inventory 110,000 Land 360,000 Equipment 600,000 Accumulated depreciation - Equipment 60,000 Bank overdraft 50,000 Accounts payable 80,000 Wages payable 150,000 Provision for long service leave 120,000 Mortgage 300,000 Unsecured Notes 90,000 400,000 Issued Capital (400,000 Ordinary share 'A' @ $1.00) Calls in arrears (400,000 Ordinary share 'A' @ $0.20) Preference shares (100,000 @ $1.2) 80,000 120,000 Accumulated losses 170,000 1,375,000 1,375,000 Upon consultation with the valuation officer, the liquidator understand that the assets held by Mars Ltd can be realised for $890,000. A breakdown of the estimated realisation amounts for each asset is presented below: Expected realisation Accounts receivable $50,000 Inventory $100,000 Land $400,000 Equipment $340,000 Total $890,000