1

Liquidation
2. The following particulars were extracted from the book of X Ltd. on 1st April, 2001 on which
day a winding up order was made :Equity Share Capital :
20,000 shares of Rs. 10 each, Rs. 5 paid up ---------------------------------- 1,00,000
14% Preference Share Capital:
20,000 shares of Rs. 10 each, fully paid -------------------------------------- 2,00,000
14% First Mortgage Debentures, secured by a floating charge
Upon the whole of the assets of the company, exclusive of
the uncalled capital -------------------------------------------------------------- 1,50,000
Fully Secured Creditors (values of securities, Rs. 35,000) -------------------

30,000

Partly Secured Creditors (values of securities, Rs. 10,000) ------------------

20,000

Preferential creditors for rates, taxes, wages, etc. -----------------------------

6,000

Bills Payable ------------------------------------------------------------------------- 1,00,000

Unsecured Creditors ----------------------------------------------------------------

70,000

Bank Overdraft ----------------------------------------------------------------------

10,000

Bills Receivable in hand -----------------------------------------------------------

15,000

Bills Discounted (one bill for Rs. 10,000 known to be bad) ----------------

40,000

Book Debts Good -----------------------------------------------------------------

10,000

- Doubtful (estimated to produce 50%) ---------------------------------7,000

- Bad --------------------------------------------------------------------------6,000
Land & Building (estimated to produce Rs. 1,00,000) --------------------- 1,50,000
Stock in Trade (estimated to produce Rs. 40,000) -------------------------50,000
Machinery, Tools, etc. (estimated to produce Rs. 2,000) -----------------5,000
Cash in hand ----------------------------------------------------------------------100
Make out (1) Statement of affairs as regards creditors and contributories, and (2) Deficiency
Account,
(Deficiency as regards creditors, contributories, Rs. 1,80,400 and Rs. 4,80, 400 respectively)
Hint: Prepare Balance Sheet; excess of liabilities and capital over assets, Rs. 3,79,900.
3. The following information was extracted from the books of a limited company on 31st
March, 2001 on which date a winding up order was madeRs.
Equity Share Capital:
2,00,000 shares of Rs. 10 each ----------------------------------------- ----- 20,00,000
14% Preference Share Capital :
3,00,000 shares of Rs. 10 each ---------------------------------------------30,00,000
Calls in arrear (estimated to produce Rs. 20,000) --------------------------40,000
14% First Mortgage Debentures secured by a floating charge on the
whole of the assets of the company (interest paid to date) -----------20,00,000

Creditors fully secured (value of securities, Rs. 4,00,000) ---------------3,50,000

Creditors partly secured (value of securities, Rs. 2,00,000) --------------4,00,000
Preferential creditors for wages, rates and taxes, etc. ---------------------75,000
Unsecured Creditors ------------------------------------------------------------27,00,000
Bank Overdraft, secured by a second charge on the whole of the assets
Of the company --------------------------------------------------------------2,00,000
Cash in hand ---------------------------------------------------------------------12,000
Books Debts Good -------------------------------------------------------------3,80,000
- Doubtful (estimated to produce Rs. 30,000) ------------------------80,000
- Bad -------------------------------------------------------------------------45,000
Stock in Trade (estimated to produce Rs. 6,00,000) ----------------------7,20,000
Freehold Land & Buildings (estimated to produce Rs. 18,50,000) -----21,00,000
Plant & Machinery (estimated to produce Rs. 6,30,000) -----------------6,00,000
Fixtures & Fittings (estimated to produce Rs. 80,000) -------------------1,20,000
You are required to prepare a statement of affairs of the company.
(Deficiency as regards (i) creditors, Rs. 15,23,000 (ii) contributories Rs. 65,03,000)
4. From the following particulars prepare a Statement of Affairs and the Deficiency Account for
submission to the Official Liquidator of the Equipments Ltd. which went into liquidation on
March 31, 2001:Rs.
Rs.
3,000 Equity Shares of Rs. 100 each, Rs. 80 paid
2,40,000
11% 1,000 Preference Shares of Rs. 100 each, fully paid 1,00,000
Less: Calls in arrear (expected to produce)
5,000
95,000
10% Debentures having a floating charge on the assets
Interest paid up to December 31, 2000) --------------------------1,00,000
Mortgage on Land & Buildings --------------------------------------------80,000
Trade Creditors ---------------------------------------------------------------2,65,500
Owing for wages -------------------------------------------------------------20,000
Secretarys Salary @ Rs. 1,500 p.m. owing ------------------------------3,000
Managing Directors Salary @ Rs. 6,000 p.m. owing ------------------6,000
Estimated to
Book
Produce
value
Rs.
Rs.
Assets :
Land and Buildings
1,30,000
1,20,000
Plant
1,30,000
2,00,000
Tools
4,000
20,000
Patents
30,000
50,000
Stock
74,000
87,000
Book Debts
60,000
90,000
Investments (in the hands of bank for an
Overdraft of Rs. 1,90,000)
1,70,000
1,80,000
st
On 31 March, 1996 the balance sheet of the company showed a general reserve of Rs. 40,000
accompanied by a debit balance of Rs. 25,000 in the Profit and Loss Account. In 1996-97, the
company made a profit of Rs. 40,000 and declared a dividend of 10% on equity shares. Besides
loss of stock due to fire of Rs. 40,000, the company suffered a total loss of Rs. 1,09,000 during
1997-98, 1998-99 and 1999-2000. For 2000-2001 accounts were not made up.
(Deficiency as regards (i) creditors Rs. 64,000 (ii) members, Rs. 4,04,000)

5. The following particulars relate to a limited company which has gone into voluntary
liquidation. You are required to prepare the Liquidators Final Account, allowing for his
remuneration @ 2% on the amount realized, and 2% on the amount distributed among
unsecured creditors other than preferential creditors :-

Preferential Creditors ------------------------------------------------Unsecured Creditors -------------------------------------------------Debentures -------------------------------------------------------------

Rs.
10,000
32,000
10,000

The assets realized the following sums :Land and Buildings --------------------------------------------------Plant and Machinery ------------------------------------------------Fixtures and Fittings -------------------------------------------------

20,000
18,650
1,000

The liquidation expenses amounted to Rs. 1,000.

(Liquidators Remuneration Rs. 1,143; Amount paid to unsecured creditors, Rs. 17,507)
6. The Sunny Valley Mining Co. Ltd. went into voluntary liquidation on 1st April, 2001, as its
mines reached such a state of depletion that it became too costly to excavate further minerals.
The Liquidator, whose remuneration is 3% on realization of assets and 2% on distribution
among shareholders, realized all the assets. The following was the position of the company on
31st March, 2001:Rs.
Cash on realization of assets ------------------------------------------------------ 5,00,000
Expenses of Liquidation ----------------------------------------------------------9,000
Unsecured Creditors (including salaries and wages for one month
Prior to liquidation, Rs. 6,000) ------------------------------------------ 68,000
1,500 14% Preference shares of Rs. 100 each (dividend paid up to
31st March, 2000) ---------------------------------------------------------- 1,50,000
10,000 Equity shares of Rs. 10 each, Rs. 9 per share called and paid up --- 90,000
General Reserve as on 31st March, 2001 ---------------------------------------- 1,20,000
Profit & Loss Account as on 31st March, 2001 --------------------------------- 20,000
Under the Articles of Association of the company, the Preference shareholders have the right to
receive one-third of the surplus remaining after repaying the equity share capital.
(Preference shareholders receive Rs. 2,17,333 and equity shareholders receive, Rs. 1,82,667)

7. The following is the Balance Sheet of X Ltd. as on 31st March, 2000 :Rs.
Authorized & Subscribed Capital :
Land & Buildings
20,000 14% Redeemable Preference
Plant & Machinery
Shares of Rs. 10 each
2,00,000
Patents
10,000 Equity shares of Rs. 10 each,
Investments
Rs. 9 paid
90,000
Stock
10,000 Equity shares of Rs. 10 each,
Sundry Debtors
Rs. 5 paid
50,000 Cash at Bank
14% Mortgage Debentures (holding a
Profit and Loss Account
Floating charge on all the assets
of the company)
1,00,000
Interest Outstanding on the Debentures
14,000
Loan secured by hypothecation of stock
40,000
Trade Creditors
72,000
Creditors for salaries and wages
15,000
Liability for workmens compensation
2,000
Owing to Government for Telephone
And purchases
2,500
Owing of government for taxes
10,000

5,95,500

Rs.
1,90,000
1,20,000
10,000
40,000
45,000
90,000
35,000
65,500

5,95,500

The company went into voluntary liquidation on 1st April, 2000 and a liquidator was appointed
with a remuneration of 2 per cent of assets realized with the exception of cash and 2 per cent of
the amount distributed among unsecured creditors other than preferential creditors. The dividend
of preference shares was not paid for 1999-2000. Stock realized Rs. 30,000 and the other assets
excluding cash realized Rs. 4,00,000. All assets were realized and payments made on September
30, 2000. Prepare the Liquidators Final Statement of Account, assuming the expenses of
liquidation were Rs. 5,610.
(Equity shares on which Rs. 5 is paid contribute Rs. 2.67 per share; the other equity
shareholders receive Rs. 1.33 per share)
8. A Ltd. went into voluntary liquidation on September 30, 2000. Its liabilities were as under:Rs.
14% Debentures with a floating charge on the assets
Except uncalled capital ---------------------------------------------2,00,000
Interest due on Debentures for one year ---------------------------28,000
Bank Overdraft (with a lien on Stock) -----------------------------50,000
Trade Creditors -------------------------------------------------------1,50,000
Loan from a director to pay wages --------------------------------10,000
Provident Fund of employees --------------------------------------30,000
E.S.I. premium for 6 months to September 30, 2000 -----------1,000
The Capital consisted of :
14% Preference Shares of Rs. 100 each fully paid --------------1,00,000
Equity Shares of Rs. 100 each, Rs. 90 paid ----------------------1,80,000
Equity Shares of Rs. 100 each, Rs. 50 paid ----------------------1,00,000

The assets realized as follows: Stock

Other Assets
Rs.
Rs.
October 15, 2000 ---------------------------------20,000
1,50,000
November 14, 2000 ------------------------------20,000
1,40,000
December 15, 2000 ------------------------------40,000
1,50,000
The liquidator is entitled to 2% on amounts realized from assets and to 25% on the saving which
the equity shareholders would have from their maximum legal liability. The debenture holders
waived interest after 30th September, 2000. After reserving Rs. 10,000 for expenses (which
ultimately amounted Rs. 8,000 and were paid on December 15, 2000), the liquidator distributed
the cash among the various parties according to their rights.
Prepare the Statement of Account which the liquidator would be required to submit.
(Debenture holders get Rs. 95,600 on October 15 and Rs. 1,32,400 on November 14,. Loss
suffered by equity shareholders Rs. 89.48 per share)