The company board of directors decided that as the company position was deteriorating rapidly they agreed to put the company into liquidation.

 

Questions:

1. Payment of $112,965 to a trade supplier. The trade supplier was threatening to take legal action to wind up the company unless payment was made. The creditor was one of many trade suppliers to the company. Samantha had been advised by Danni on 28 September 2022 that the revised financial statements prepared by Charles disclosed showed a rapid deterioration in the financial position of the company and it was now insolvent as the company did not have sufficient funds to pay all creditors. Samantha however insisted that the particular supplier be paid the $112.965.

 

2. Pablo's nephew was starting school and needed a laptop. The company has one spare laptop and Pablo took this laptop and gave it to his nephew. The laptop had a book value in the financial accounts of the company of value of $950.

  

Transcribed Image Text:

Gravitas Pty Ltd is company that runs food and coffee shops in Melbourne and regional Victoria. It has 10 stores in total. It survived the impact of COVID because it could to takeaway coffees and the support of various State and Federal Government Grants. Now that the government support has ceased and the customers are starting to come back into the cafes, business seems to be picking up. However, in recent months rising interest rates, rent, cost of supplies and labour costs have made the possibility of the company surviving more difficult. The directors of the company are: • Pablo the chairperson Samantha the CEO and Danni the CFO. Charles the senior accountant has advised the Board of directors that the company is facing financial difficulties unless it can raise new funds whether from the shareholders or from a financial institution. The company currently has enough funds to meet the next two months of operating expenses (up to 8 November 2022) Gravitas Pty Ltd is company that runs food and coffee shops in Melbourne and regional Victoria. It has 10 stores in total. It survived the impact of COVID because it could to takeaway coffees and the support of various State and Federal Government Grants. Now that the government support has ceased and the customers are starting to come back into the cafes, business seems to be picking up. However, in recent months rising interest rates, rent, cost of supplies and labour costs have made the possibility of the company surviving more difficult. The directors of the company are: • Pablo the chairperson Samantha the CEO and Danni the CFO. Charles the senior accountant has advised the Board of directors that the company is facing financial difficulties unless it can raise new funds whether from the shareholders or from a financial institution. The company currently has enough funds to meet the next two months of operating expenses (up to 8 November 2022)

Answer rating: 100% (QA)

1 Payment of 112965 to a trade supplier Debit Trade Payables 112965 to reduce ... View the full answer