Answer :
The journal entries record The realization of the assets of Alldone Ltd. The payment of the liabilities of Alldone Ltd. The distribution of the remaining assets to the shareholders of Alldone Ltd.
The first journal entry records the realization of the land. The land is sold for $45,000, which is less than its book value of $60,000. The difference is recognized as a loss on realization.
The second journal entry records the realization of the other assets. The other assets are sold for $20,000, which is also less than their book value of $36,000. The difference is recognized as a loss on realization.
The third journal entry records the payment of the bank loan. The bank loan is secured by the land, so the liquidator is able to pay off the entire loan with the proceeds from the sale of the land.
The fourth journal entry records the payment of the other creditors. The other creditors are not secured, so the liquidator is only able to pay them $20,000, which is the amount of cash that is available.
The fifth journal entry records the distribution of the remaining assets to the shareholders. The shareholders are each entitled to $10, which is the amount of cash that is remaining after the liabilities have been paid.
Here are the journal entries in full:
**Date** **Account** **Debit** **Credit** **Narration**
**30-Jun-20** Land 60,000 Loss on realization 15,000 Cash 45,000 To record the realization of the land at $45,000.
30-Jun-20 Other assets 36,000 Loss on realization 16,000 Cash 20,000 To record the realization of the other assets at $20,000.
30-Jun-20 Bank loan 35,000 Cash 35,000 To record the payment of the bank loan.
30-Jun-20 Other creditors 20,000 Cash 20,000 To record the payment of the other creditors.
30-Jun-20 Retained losses 10,000 Cash 10,000 To distribute the remaining assets to the shareholders.
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