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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2020, the date on which the company is to file a voluntary petition of bankruptcy: Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total assets LIMESTONE COMPANY Balance Sheet June 3, 2020 Assets Liabilities and Equities Accounts payable. Notes payable-current (secured by equipment) Notes payable-long-term (secured by land and buildings) Common stock Retained earnings Total liabilities and equities 4,000 77,000 112,000 112,000 312,000 204,000 $ 821,000 $ 122,000 274,000 202,000 132,000 91,000 $ 821,000 Additional Information If the company is liquidated, administrative expenses are estimated at $30,000. • The accounts payable figure includes $22,000 in wages earned by the company's 12 employees during May. No one earned more than $3,400. • Liabilities do not include taxes of $26,000 owed to the U.S. government. . Company officials estimate that 30 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $92,000. The land and buildings will be sold together for approximately $334,000; the equipment should bring $142,000 at auction. Prepare a statement of financial affairs for Limestone Company as of June 3, 2020.
Transcribed Image Text:The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2020, the date on which the company is to file a voluntary petition of bankruptcy: Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total assets LIMESTONE COMPANY Balance Sheet June 3, 2020 Assets Liabilities and Equities Accounts payable. Notes payable-current (secured by equipment) Notes payable-long-term (secured by land and buildings) Common stock Retained earnings Total liabilities and equities 4,000 77,000 112,000 112,000 312,000 204,000 $ 821,000 $ 122,000 274,000 202,000 132,000 91,000 $ 821,000 Additional Information If the company is liquidated, administrative expenses are estimated at $30,000. • The accounts payable figure includes $22,000 in wages earned by the company's 12 employees during May. No one earned more than $3,400. • Liabilities do not include taxes of $26,000 owed to the U.S. government. . Company officials estimate that 30 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $92,000. The land and buildings will be sold together for approximately $334,000; the equipment should bring $142,000 at auction. Prepare a statement of financial affairs for Limestone Company as of June 3, 2020.
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