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General ACCALiquidation

PPatrick12y ago
Hi everybody, I know it's a really basic question regarding a company liquidation but I have a doubt. Assume that Kennedy Company acquires $1,300 cash from creditors and $2,400 cash from investors. If Kennedy has net income of $1,300 and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive? I know that creditors always get paid first so they will get their $1,300 back. Now my question is: Do investors get all the remaining cash ($3,700) or only their $2,400 back? Thanks for your help
MikeLittleMikeLittleTutor12y ago#1
Having paid back ALL the creditors, the amount which is left goes to the investors. What does Kennedy's balance sheet look when they start the liquidation? Has any money been paid out? Are there any assets or is it just cash that remains. Show me the balance sheet and I'll give you an answer
PPatrick12y ago#2
Hi Mike, Thanks for your reply. My exercise doesn't provide a balance sheet all the information I have are the ones provided above. Thanks
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