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In: Accounting

Kelly Mills Ltd was wound up on 22nd August 2020. Kelly Mills Ltd Trial Balance as...

Kelly Mills Ltd was wound up on 22nd August 2020.

Kelly Mills Ltd

Trial Balance

as at 22nd August 2020

Debit

Credit

Cash

$46 800

Inventories

981 760

Plant and equipment

1 099 280

Land and buildings

312 000

Accumulated losses

420 160

Accounts payable

$832 000

Alliance Bank mortgage loan (secured on land and buildings)

208 000

Share capital: 1 820 000 ordinary shares issued for $1 each, fully paid

. .

1 820 000

$2 860 000

$2 860 000

The following information is relevant

  1. The assets were sold and realised the following cash amounts:

Inventories $624 000

Plant and machinery $728 000

  1. The Alliance Bank took possession of the land and buildings, sold them for $468 000 and after the debt was cleared paid any excess funds to the liquidator.
  1. Liquidation costs were $98 800.
  1. The liquidator paid all liabilities.

Required

Prepare the JOURNAL ENTRIES to wind up the affairs of Kelly Mills Ltd and to calculate any deficiency and distribution to the shareholders.

T accounts are NOT required.

Solutions

Expert Solution

ANSWER

General Journal Debit   Credit Rough
Cash        13,52,000 624000+728000
P/L Account           7,29,040 981760+1099280-1352000
    Inventory           9,81,760                                     9,81,760
    Plant and Machinery        10,99,280                                   10,99,280
(Being inventory and machine sold less
than cost and loss transferred to P/L)
Alliance Bank mortgage loan           2,08,000                                     2,08,000
Cash           2,60,000 468000-208000
    Land and Bilding           3,12,000                                     3,12,000
    P/L Account           1,56,000 468000-312000
(Being land and building sold and loan repaid)
P/L Account              98,800
   Cash              98,800
(Being liquidation expenses paid)
Accounts Payable           8,32,000
   Cash           8,32,000
(Being paid to account payable)
Share capital        18,20,000
   Accumulated losses           4,20,160                                     4,20,160
P/L A/C           6,71,840 98800+729040-156000
   Shareholders Account           7,28,000
(Being remaining paid to shareholders)
Notes:
(i) Cash shedule $
Opening balance              46,800
Inventory           6,24,000
P&M           7,28,000
Land and Building           4,68,000
Alliance Bank mortgage loan repaid         -2,08,000
Accounts payable         -8,32,000
Liquidation expenses             -98,800
Balance to shareholders           7,28,000

================

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ekkarill92 answered 2 years ago
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