Question

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

Kelly Mills Ltd

Trial Balance

as at 22^nd 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

2. 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.

3. Liquidation costs were $98 800.

4. 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.

Answer 1

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