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The document outlines the financial situation of Yakowa as of December 31, 2011, detailing his business commencement, profits, and average annual drawings. It provides a comprehensive list of assets and liabilities, including unsecured creditors, secured trade payables, and various asset realizations. Additionally, it includes a historical overview of financial affairs from 1996, requiring the preparation of a Statement of Affairs and Deficiency Account for creditors.

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Samuel Favour Amah
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2 views4 pages

Class Work

The document outlines the financial situation of Yakowa as of December 31, 2011, detailing his business commencement, profits, and average annual drawings. It provides a comprehensive list of assets and liabilities, including unsecured creditors, secured trade payables, and various asset realizations. Additionally, it includes a historical overview of financial affairs from 1996, requiring the preparation of a Statement of Affairs and Deficiency Account for creditors.

Uploaded by

Samuel Favour Amah
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Illustration one

On 1 January 2000, Yakowa commenced business with N672,000. For years 2007
to 2011, profits were N80,000, N64,000, N36,000, N28,000 and N8,000
respectively. His average annual drawing was N44,000.

A receiving order was made against him on 31 December 2011, when his position
was as follows:

N„000

Unsecured creditors 400

Mortgage Freehold Factory 80

Trade payables (partly secured) 240

(Security: Life Policy estimated at N80,000)

Amount payable in respect of salaries and wages (preferential) 9.6

Bills receivable, discounted and expected to rank 64

Freehold factory (cost N800,000) Estimated to realize 400

Trade receivables: Good 120

Doubtful (Estimated to realiseN12,000) 40

Bad 100

Furniture & Fittings (Estimated to realiseN7,000) 16

Plant and Machinery (Estimated to realiseN40,000) 160

Trade inventories (Estimated to realiseN111,000) 160


Cash -in- hand 1.6

Required: Prepare a Statement of Affairs and Deficiency Account in statutory


form.

Assignment
On 31st December 1996, a Receiving Order was made against him when his
tinancial affairs were as follows:

N N N

Capital Freehold building 45,000

At 1 Jan: 1996 59220 Plant and machinery 37,500

loss for the year 9,600 Furniture & Fitting 16,800

Drawing 13,500 (23.100) Motor Vehicles 18,300

36,120 Stock 13,080

Mortgage on 36,000 Debtors 27,420

freehold - Bills receivable 7,200


buildings

Bank Overdraft 16,500 Cash at bank 3,300

(Secured) Cash in hand 270

Creditors 57,750

[Link] 22,500

168,870 168,870

The following additional information is given on the above financial Affairs;


Creditors comprised:

a)Trade creditors 36,300

PAYE deduction (1995 #2100; 1996 3,600


N1500)

income tax (1995 200; #*1996 #1,350) 2,250

Rates (15 months to 31 December, 1996) 450'

Sundry creditors 15, 150

57,750

Sundry creditors included six months wages due to the book-keeper at the rate
of N125 per month.
a) The assets are estimated to be realized as follows

1) Freehold land and buildings 43,500

11) Plant and Machinery 20,700

111) Furniture and Fittings 10,200

Motor Vehicles 7,800

The stock is estimated to produce 10,350

The debtor is made up of:

Goods debts 15,000


Doubtful debts 7,500 estimated to produce 4,800

Bad debts 4.920 estimated to


produce nil 27,420
b) The bank overdraft was secured on the life policy of Mark, the

surrender value of which is N11,700.

c) There was a contingent liability of 10,500 in respect of bills discounted of

this amount, N4,200 would not be honoured on maturity.

d) The bills receivable are expected to

produce N4,650.
You are required to prepare the Statement of Affairs

Deficiency Account for presentation to a meeting of creditors:

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