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Peppermint Ltd went into voluntary liquidation on 30 June 2020
Peppermint Ltd went into voluntary liquidation on 30 June 2020. A statement of financial position prepared at that date was as follows:
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Peppermint Ltd
Statement of Financial Position as at 30 June 2020
Current Assets
Cash $11,000
Inventories 85,700
Total Current Assets 96,700
Non-current Assets
Equipment 142,800
Land and Buildings 70,000
Total Non-current Assets 212,800
Total Assets 309,500
Current Liabilities
Accounts Payable 40,000
Total Current Liabilities 40,000
Non-current Liabilities
Mortgage (secured over Land and Buildings) 80,000
Total Non-current Liabilities 80,000
Total Liabilities 120,000
Net Assets $189,500
Equity
300,000 ordinary shares issued for $1 each, fully paid 300,000
Accumulated Losses (110,500)
Total Equity $189,500
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Additional information:
(a) The sale proceeds of assets realised the following amounts in cash:
Inventories $70,000
Equipment 80,000
(b) The mortgage holder took possession of the land and buildings and sold them for $90,000 and after settlement of the debt paid any excess funds to the liquidator.
(c) Liquidation costs amounted to $15,000.
(d) The liquidator paid all liabilities.
Required:
- Prepare general journal entries to record the liquidation of Peppermint Ltd.
Expert Solution
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Journal Entries in the books of Peppermint Ltd. |
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on Liquidation: |
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Date |
Acc Titles |
Debit $ |
Credit $ |
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30-Jun-20 |
Liquidator Final Statement |
161000 |
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Cash |
11000 |
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Inventory |
70000 |
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Equipment |
80000 |
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(The assets transferred to liquidators account |
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on disposal) |
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30-Jun-20 |
Liquidator Final Statement |
10000 |
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Mortgage |
80000 |
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Land and buildings |
90000 |
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(mortgage are settled through Land and |
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buildings and remainder transferred to liquidators) |
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30-Jun-20 |
Liquidation expense |
15000 |
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Liquidator Final Statement |
15000 |
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(liquidation expenses paid off) |
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30-Jun-20 |
Accounts Payable |
40000 |
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Liquidator Final Statement |
40000 |
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(all current liabilities paid off) |
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30-Jun-20 |
Equity shareholders |
116000 |
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Liquidator Final Statement |
116000 |
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(Balance in Liquidators Statement |
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settled to the Ordinary shareholders) |
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