Insolvency

Larry Ltd went into voluntary liquidation on 30 June 2020. Its summarised statement of financial position at that date is as follows:

All assets realised amounted to $55 000. Payables allowed a $500 discount. Costs of liquidation were $3 000.

Required:

1. Complete the journal entries to liquidation. The narrations for the journal entries have been provided to you as additional guidance.

Journal for your answer to question 1.

• Follow the table below to answer the questions.

• Show the working.

Date	Account	Dr	Cr
30 June 2021	Liquidation receipts & payments Cash (Transfer cash)	10 000	10 000
	(Transfer of carrying amounts)
	(Realisation of assets)
	(Record expenses of liquidation)
	(Record payment of payables & discount)
	(Close of shareholders account)
	(Distribution of final funds to shareholders)
	(Close out liquidation profit)

2. Record the entries in the Liquidation account, the Liquidators receipts & payments, and the Shareholders distribution account.

Ledger accounts for your answer to question 4 part (ii). Expand the tables as needed to contain your answer. Show your working.

Liquidators Receipts & Payments
Liquidation
Shareholders Distribution

Larry Ltd Statement of Financial Position 2020 As at 30 June .Equity IC Share capitale 000 10 13 0002 23 0004 6 | Current assets 53 0007Cash- Inventory Non-current assets Lande Total assets - | | | | | 39 000 62 000 6 | | | | 6 Current liabilities Payables 9 0002 16 0003Net assets 53 | Total equity 53 000 6 Larry Ltd Statement of Financial Position 2020 As at 30 June .Equity IC Share capitale 000 10 13 0002 23 0004 6 | Current assets 53 0007Cash- Inventory Non-current assets Lande Total assets - | | | | | 39 000 62 000 6 | | | | 6 Current liabilities Payables 9 0002 16 0003Net assets 53 | Total equity 53 000 6