Reference no: EM132723653
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
Problem 1: 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.