Order of priority for paying creditors:Oakland Ltd, whose capital consisted of $50000 in fully paid shares, was wound up as a result of a court order. Its liquidator realised $3,358,250 from the sale of the company’s assets. This amount included $850,000 from the proceeds on sale of the company’s land and buildings. Debts proved and admitted were: Unsecured Notes700000Debentures (secured by circulating security interest)1500000First mortgage on land and buildings500000Trade accounts payable400000PAYG tax instalment3900Fringe benefits tax10000Directors’ fees15000GST9945Employees’ holiday pay25000Employees’ wages —20000Secretary’s salary —3600Managing director’s salary —12000Sales commission2500Liquidation expenses15000Second mortgage on land and buildings400000Liquidator’s remuneration40000 RequiredShow the order of priority of payment of debts for Oakland Ltd and calculate the amount payable to the company’s trade accounts payable.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Order of priority for paying creditors:

Oakland Ltd, whose capital consisted of $50000 in fully paid shares, was wound up as a result of a court order. Its liquidator realised $3,358,250 from the sale of the company’s assets. This amount included $850,000 from the proceeds on sale of the company’s land and buildings. Debts proved and admitted were:

Unsecured Notes	700000
Debentures (secured by circulating security interest)	1500000
First mortgage on land and buildings	500000
Trade accounts payable	400000
PAYG tax instalment	3900
Fringe benefits tax	10000
Directors’ fees	15000
GST	9945
Employees’ holiday pay	25000
Employees’ wages —	20000
Secretary’s salary —	3600
Managing director’s salary —	12000
Sales commission	2500
Liquidation expenses	15000
Second mortgage on land and buildings	400000
Liquidator’s remuneration	40000

Required

Show the order of priority of payment of debts for Oakland Ltd and calculate the amount payable to the company’s trade accounts payable.

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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