Question 2 Snowflakes Ltd (13 marks) Snowflakes Ltd, a company based in Australia, went into members' voluntary liquidation on 17 December 2021. The Statement of Financial Position of Snowflakes Ltd is presented below. Snowflakes Ltd Statement of Financial Position As at 17 December 2021 $ $ 100 000 125 000 (89000) Assets Leasehold land Plant and equipment Less: Accumulated depreciation - plant and equipment Goodwill Trade and other receivables Inventories Cash at bank 36 000 30 000 119 700 21 900 14 000 321 600 Liabilities Trade and other payables Current tax payable Accrued liabilities Provision for legal suit Bank loan (secured by non-circulating interest on land) 9% debentures (secured by circulating interest) 64 300 27 000 15 500 20 000 82 000 20 000 228 800 92 800 Net assets 18 000 76 000 Equity 18 000 10% preference shares fully paid at $1 40 000 'A1' ordinary shares issued for $3 (paid to $1.90) 15 000 'B1' ordinary shares issued for $(called to $0.75) Less: Calls in arrears 3 000 shares at $0.25 11 250 (750) 10 500 104 500 (11 700) 92 800 Accumulated losses Total equity Question 2 Snowflakes Ltd (contd.) Additional information: (a) The liquidator was able to receive the following amounts for assets: Plant and equipment $ 38 000 Trade and other receivables $ 98 000 Inventories $ 30 000 (b) The leasehold land was sold by the bank from which Snowflakes Ltd secured the bank loan for $90 000 and, after settlement of local government rates, and the bank borrowings, the remainder was transferred to the liquidator. (c) Trade and other payables were settled with a discount given to Snowflakes Ltd of $6 300. The legal suit was settled out of court for $22 000. (d) The item 'Accrued liabilities' in the financial statements of Snowflakes Ltd included: Local government rates payable $ 1 800 Directors' fees payable $ 1 500 GST payable $ 1 100 Rent payable $ 2 250 Accrued utilities payable $ 750 Wages payable $ 4 850 Other payables $ 3 250 $ 15 500 (e) Unrecorded liabilities included arrears of preference dividends of $1 500, liquidation expenses, $ 1 500, and liquidation fee of $3 500. 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 (1) The liquidator forfeited all 'B1' ordinary shares on which calls were unpaid. (9) After meeting all liabilities and expenses, the liquidator will distribute the remaining balance to shareholders by 31 December 2021 if any. Required: Show all workings. Prepare the Liquidation account, the Liquidator's Cash account and the Shareholders Distribution account in T - format) for Snowflakes Ltd as at 17 December 2021. Determine the gain or loss on liquidation accordingly
