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Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The following is a trial balance as of March 14, 2020. Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 67,000 101,000 22,000 93,000 142,000 36,000 31,000 Credit $ 54,000 71,000 37,000 29,000 25,000 Assume that the company will be liquidated and the following transactions will occur: 113,000 91,000 192,000 22,000 168,000 26,000 $660,000 $660,000 • Accounts receivable of $39,000 are collected with remainder written off. All of the company's inventory is sold for $61,000. Additional accounts payable of $31,000 incurred for various expenses, such as utilities and maintenance, are discovered. The land and building are sold for $113,000. The note payable due to the Colorado Savings and Loan is paid. The equipment is sold at auction for only $32.000 with the proceeds applied to the note owed to the First National Bank

Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The following is a trial balance as of March 14, 2020. Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 67,000 101,000 22,000 93,000 142,000 36,000 31,000 Credit $ 54,000 71,000 37,000 29,000 25,000 Assume that the company will be liquidated and the following transactions will occur: 113,000 91,000 192,000 22,000 168,000 26,000 $660,000 $660,000 • Accounts receivable of $39,000 are collected with remainder written off. All of the company's inventory is sold for $61,000. Additional accounts payable of $31,000 incurred for various expenses, such as utilities and maintenance, are discovered. The land and building are sold for $113,000. The note payable due to the Colorado Savings and Loan is paid. The equipment is sold at auction for only $32.000 with the proceeds applied to the note owed to the First National Bank

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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Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. (Negative amounts should be indicated by a minus sign.) Book balances, 3/14/20 Accounts receivable collected-remaining balance assumed to be uncollectible Inventory sold Accounts payable discovered Land and buildings all sold Fully secured note paid Equipment sold Payment made on partially secured debt Investments sold Administrative expenses accrued Remaining partially secured claims reclassified as unsecured liabilities Final balances remaining for unsecured creditors Show Transcribed Text Required A Required B LYNCH, INC. Statement of Realization and Liquidation March 14, 2020 to July 23, 2020 < Required A Cash < Required A Noncash Assets 0 $ Required B Liabilities with Priority 0 $ Fully Secured Creditors 0 $ Required B > Partially Unsecured Stockholders' Secured Nonpriority Equity Creditors Liabilities (Deficits) How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $4,000? (Round your final answer to nearest whole dollar amount.) Cash paid 0 $ 0 $ 0 $
Transcribed Image Text:Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. (Negative amounts should be indicated by a minus sign.) Book balances, 3/14/20 Accounts receivable collected-remaining balance assumed to be uncollectible Inventory sold Accounts payable discovered Land and buildings all sold Fully secured note paid Equipment sold Payment made on partially secured debt Investments sold Administrative expenses accrued Remaining partially secured claims reclassified as unsecured liabilities Final balances remaining for unsecured creditors Show Transcribed Text Required A Required B LYNCH, INC. Statement of Realization and Liquidation March 14, 2020 to July 23, 2020 < Required A Cash < Required A Noncash Assets 0 $ Required B Liabilities with Priority 0 $ Fully Secured Creditors 0 $ Required B > Partially Unsecured Stockholders' Secured Nonpriority Equity Creditors Liabilities (Deficits) How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $4,000? (Round your final answer to nearest whole dollar amount.) Cash paid 0 $ 0 $ 0 $
Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The following is a trial balance as of March 14, 2020. Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable. Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 67,000 101,000 22,000 93,000 142,000 36,000 31,000 168,000 $ Assume that the company will be liquidated and the following transactions will occur: Credit Complete this question by entering your answers in the tabs below. 54,000 71,000 37,000 29,000 25,000 113,000 26,000 $660,000 $ 660,000 91,000 192,000 22,000 • Accounts receivable of $39,000 are collected with remainder written off. • All of the company's inventory is sold for $61,000. • Additional accounts payable of $31,000 incurred for various expenses, such as utilities and maintenance, are discovered. • The land and building are sold for $113,000. • The note payable due to the Colorado Savings and Loan is paid. • The equipment is sold at auction for only $32,000 with the proceeds applied to the note owed to the First National Bank. • The investments are sold for $63,000. • Administrative expenses total $41,000 as of July 23, 2020, but no payment has been made yet. a. Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $4,000? Required A Required B Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. (Negative amounts should be indicated by a minus sign.) LYNCH, INC. Statement of Realization and Liquidation March 14, 2020 to July 23, 2020 Noncash Cash Assets Liabilities with Fully Partially Unsecured Stockholders' Secured Secured Nonpriority Equity Priority Creditors Creditors Liabilities (Deficits)
Transcribed Image Text:Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The following is a trial balance as of March 14, 2020. Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable. Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 67,000 101,000 22,000 93,000 142,000 36,000 31,000 168,000 $ Assume that the company will be liquidated and the following transactions will occur: Credit Complete this question by entering your answers in the tabs below. 54,000 71,000 37,000 29,000 25,000 113,000 26,000 $660,000 $ 660,000 91,000 192,000 22,000 • Accounts receivable of $39,000 are collected with remainder written off. • All of the company's inventory is sold for $61,000. • Additional accounts payable of $31,000 incurred for various expenses, such as utilities and maintenance, are discovered. • The land and building are sold for $113,000. • The note payable due to the Colorado Savings and Loan is paid. • The equipment is sold at auction for only $32,000 with the proceeds applied to the note owed to the First National Bank. • The investments are sold for $63,000. • Administrative expenses total $41,000 as of July 23, 2020, but no payment has been made yet. a. Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $4,000? Required A Required B Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. (Negative amounts should be indicated by a minus sign.) LYNCH, INC. Statement of Realization and Liquidation March 14, 2020 to July 23, 2020 Noncash Cash Assets Liabilities with Fully Partially Unsecured Stockholders' Secured Secured Nonpriority Equity Priority Creditors Creditors Liabilities (Deficits)
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