Butterfly Ltd went into liquidation on 30 June 2018, its equity being as follows: 20 000 10% preference shares each fully paid at $1 10 000 1st issue ordinary shares each fully paid at $1 50 000 2nd issue ordinary shares issued for $1 and paid to 50c Retained earnings (credit balance) $1500 The constitution states that preference shares carry the right to payment of arrears of dividends whether declared or undeclared up to the commencement of the winding up. The last preference dividend was paid to 30 June 2017. To adjust the rights of contributories, the liquidator made a call of 50c per share on the 2nd issue ordinary shares. All call money was received except that in respect of 500 2nd issue ordinary shares. This money proved to be irrecoverable and the shares were subsequently forfeited. Claims admitted for payment amounted to $16 870, assets realised $30 000, and liquidation expenses were $150. Liquidator’s remuneration was fixed at 1% of gross proceeds from sale of assets. Required A. Prepare the liquidator’s final statement of receipts and payments. B. Provide a statement showing the final distribution to shareholders, based on the statement in the constitution that all shares, by number, rank equally on distribution of final cash.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Butterfly Ltd went into liquidation on 30 June 2018, its equity being as follows: 20 000 10% preference shares each fully paid at $1 10 000 1st issue ordinary shares each fully paid at $1 50 000 2nd issue ordinary shares issued for $1 and paid to 50c Retained earnings (credit balance) $1500 The constitution states that preference shares carry the right to payment of arrears of dividends whether declared or undeclared up to the commencement of the winding up. The last preference dividend was paid to 30 June 2017. To adjust the rights of contributories, the liquidator made a call of 50c per share on the 2nd issue ordinary shares. All call money was received except that in respect of 500 2nd issue ordinary shares. This money proved to be irrecoverable and the shares were subsequently forfeited. Claims admitted for payment amounted to $16 870, assets realised $30 000, and liquidation expenses were $150. Liquidator’s remuneration was fixed at 1% of gross proceeds from sale of assets. Required A. Prepare the liquidator’s final statement of receipts and payments. B. Provide a statement showing the final distribution to shareholders, based on the statement in the constitution that all shares, by number, rank equally on distribution of final cash.

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