Liquid for Final Statement of Account Receivers Receipt and Payment Account

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Liquidator’s Final Statement of Accounts and Receipt and Payment Account

Liquidator’s Final Statement of Accounts

The liquidator’s role involves managing the process of asset realization and distributing the proceeds to creditors and shareholders. The final statement of accounts details how the liquidator has handled these responsibilities. Here's a detailed breakdown of the disbursement order and key elements:

1. Secured Creditors:

  • Priority: Secured creditors are paid first up to the amount realized from the sale of their security. If the sale of securities does not cover the full claim, the remaining balance is treated as an unsecured claim.
  • Surplus: If the sale proceeds exceed the secured creditor’s claim, the surplus is returned to the liquidator and recorded as a receipt. The payment to secured creditors is not shown in the liquidator’s final statement.

2. Legal Charges:

  • Description: These are costs associated with legal proceedings during liquidation, such as attorney fees. They are settled after securing creditors but before other claims.

3. Liquidator’s Remuneration:

  • Description: This covers the liquidator’s fees for their services in managing the liquidation process. It is paid out after legal charges.

4. Costs of Winding Up:

  • Description: These are administrative costs related to the liquidation process, including court fees and other operational expenses. They follow the payment of the liquidator’s remuneration.

5. Preferential Creditors:

  • Description: Preferential creditors include employees and tax authorities with priority over other unsecured creditors. They are paid after winding-up costs and before other unsecured creditors.

6. Debenture Holders/Floating Charge Creditors:

  • Description: These creditors hold debentures with a floating charge on the company's assets. They are paid after preferential creditors.

7. Unsecured Creditors:

  • Description: These include general creditors without secured claims. Payments are made from any remaining funds after satisfying all other claims, including dividends to shareholders.

8. Preference Shareholders:

  • Description: Preference shareholders receive their due payments after all creditors are settled. If preference shares carry a fixed dividend, these are paid before equity shareholders.

9. Equity Shareholders:

  • Description: Equity shareholders receive any remaining funds after satisfying all other claims. They only get paid if there are surplus funds left after all other obligations are fulfilled.

Receipt and Payment Account

A Receipt and Payment Account is a summarized cash book reflecting the cash transactions over a specific period. It is commonly used by non-profit organizations to record cash inflows and outflows. Here’s how it is prepared and its key features:

Characteristics:

  • Summary of Cash Book:
    • Reflects all cash transactions, similar to a cash book but summarized.
  • Recording Transactions:
    • Debit Side: Lists all cash receipts for the year, including both revenue and capital receipts.
    • Credit Side: Lists all cash payments, including both revenue and capital payments.
  • Inclusion of Cash Transactions Only:
    • Only cash transactions are recorded, excluding non-cash items like depreciation and accruals.
  • Closing Balance:
    • Typically shows a debit balance, reflecting cash in hand and at the bank. A credit balance indicates a bank overdraft.
  • Non-Cash Items:
    • Non-cash items, such as depreciation or outstanding expenses, are not recorded in this account but are considered for preparing the Income and Expenditure Account.

Method of Preparation:

  • Opening Balances:
    • Start with the opening balance of cash in hand and at the bank. If there is an overdraft, record it on the credit side.
  • Record Transactions:
    • Enter all receipts on the debit side and all payments on the credit side, classified appropriately.
  • Calculate Closing Balance:
    • Compute the difference between the total of the debit side and the credit side to determine the closing balance. If the credit side exceeds the debit side, show the difference as a bank overdraft.
  • Exclusions:
    • Exclude incomes and expenses not involving cash inflows or outflows from this account.

Summary:

  • Liquidator’s Final Statement of Accounts details the orderly payment of claims, prioritizing secured creditors, legal charges, liquidator’s fees, and other creditors.
  • Receipt and Payment Account summarizes all cash transactions, showing the net cash balance and excluding non-cash items.

These accounts provide a clear view of financial transactions and obligations during liquidation and operational periods, helping ensure accurate financial management and transparency.