Liquidation of Companies15 Marks

Glitz Ltd went into voluntary liquidation on 30 June 2020, its summarized statement of financial position then being:

Glitz Ltd

Statement of Financial Position

as at 30 June 2020

Current Assets

Equity

Debtors

$10,000 Share capital:

Inventory 160,000 shares issued at a price of

$12,000 $1, called to $0.50 $80,000

Less: Calls in arrears (40,000 at $0.25)($10,000)

Cash

$8,000

Non-Current Assets

Land

$40,000

Plant

$18,000

Total Assets

$88,000

Current Liabilities

Payables

($18,000)

Net Assets $70,000 Total Equity$70,000

All assets were realized at $60,000. Calls in arrears were fully collected. Payables allowed $1,000 discount. Cost of liquidation were $5,000

Required:

A.Record the above in the Liquidation account, the Liquidator's Cash account and the Shareholders' Distribution account.