LITZ CORPORATION Balance Sheet August 8, 2017 Assets Cash Accounts receivable (net) Investments.. Inventory (net realizable value is expected to approximate cost) . Land..... Buildings (net) Equipment (net) . $ 16,000 82,000 32,000 69,000 30,000 340,000 210,000 Total assets. $779,000 Llablitles and Equitles Accounts payable... Notes payable-current (secured by inventory) Notes payable-long term [secured by land and buildings (valued at $300,000)]... Common stock. Retained earnings. $150,000 132,000 259,000 135,000 103,000 Total liabilities and equities. $779,000
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following
The following events occur during the liquidation process:
• The investments are sold for $39,000.
• The inventory is sold at auction for $48,000.
• The money derived from the inventory is applied against the current notes payable.
• Administrative expenses of $15,000 are incurred in connection with the liquidation.
• The land and buildings are sold for $315,000. The long-term notes payable are paid.
• The accountant determines that $34,000 of the accounts payable are liabilities with priority.
• The company’s equipment is sold for $84,000.
•
• The administrative expenses are paid.
a. Prepare a statement of realization and liquidation for the period just described.
b. What percentage of their claims should the unsecured creditors receive?
![LITZ CORPORATION
Balance Sheet
August 8, 2017
Assets
Cash
Accounts receivable (net)
Investments..
Inventory (net realizable value is expected to approximate cost) .
Land.....
Buildings (net)
Equipment (net) .
$ 16,000
82,000
32,000
69,000
30,000
340,000
210,000
Total assets.
$779,000
Llablitles and Equitles
Accounts payable...
Notes payable-current (secured by inventory)
Notes payable-long term [secured by land
and buildings (valued at $300,000)]...
Common stock.
Retained earnings.
$150,000
132,000
259,000
135,000
103,000
Total liabilities and equities.
$779,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5b9e70dc-4895-40e8-83bd-d1438d9cca25%2Fe187f0e6-eac3-4512-93da-be2ee297e441%2Fe31ihq.png&w=3840&q=75)
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