ACT305 CORPORATE ACCOUNTING
A compulsory winding up in insolvency order was issued by the court in respect of Rock Bottom Ltd. The company had a capital of 65 000 fully paid ordinary shares of $1 each. The liquidator took possession of the company’s assets which raised $873 145 on sale. Included in the sale proceeds was $221 000 from the disposal of the land and buildings.
The creditors submitted their claims and the following debts were admitted as proven:
| Liquidation expenses | $3 900 |
| Liquidator’s remuneration | 10 400 |
| Mortgage loan secured on land and buildings | 130 000 |
| Additional mortgage loan on land and buildings | 104 000 |
| Employees’ wages 5 employees for 2 weeks at $520 per week | 5 200 |
| Secretary’s salary — 3 weeks at $314 per week | 942 |
| Employees’ holiday pay | 6 500 |
| Sales commission | 650 |
| Managing director’s salary — 4 weeks at $780 per week | 3 120 |
| Directors’ fees | 3 900 |
| Trade creditors | 104 000 |
| Unsecured loan stock | 130 000 |
| Debentures (secured by circulating security interest) | 390 000 |
| PAYG tax instalment | 1 014 |
| Fringe benefits tax | 2 600 |
| GST | 2 586 |
Required
Show the order of priority of payment of debts for Rock Bottom Ltd and calculate the amount payable to the company’s ordinary unsecured creditors.
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