Prost Company has filed a bankruptcy petition. Its account balances at December 31, 2012, are presented here: Cash Notes Receivable $ 2,500 60,000 76,000 Accounts Receivable (net) Inventories Finished Goods Work in Process 43,000 60,000 Raw Materials Prepaid Expenses Investment in Stock 51,000 4,000 12,000 Land 140,000 400,000 10,000 $858,500 Properny and Equipment (net) Goodwill Total Accounts Payable Accrued Wages (all with priority) Bank Notes Payable Mongage Payable Common Stock $220,000 45,000 225,000 350,000 380,000 (361,500) $858 500 Retained Earnings (deficit) Total The following additional information is available: 1. All notes receivable with the exception of one for $2,500 are expected to be collected. The notes receivable are pledged as security on the bank notes payable. 2. Of the total accounts receivable, $55,000 is expected to be collected. The accounts receivable are aso pledged as security on the bank notes payable. 3. Finished goods can be sold at 30% above cost. Selling expenses will be approximately 15% of selling price. Work in process is to be completed at an additional cost of $30,000, of which $19,000 represents the cost of raw materials. The expected selling price of the work in process (after completion) is 10% above cost, with selling expenses of 15% of selling price. Unused raw materials can be sold for $18,000. 4. Prepaid expenses are fully recoverable. 5. The investment in stock consists of 100 shares of MBI Company with a current market value of $19,000. 6. Land is appraised at $200,000, and plant and equipment is appraised at $205,000. The land and plant and equipment serve as collateral on the mortgage payable. Accrued but unrecorded interest on the mortgage payable amounts to $3,000. Required A. Prepare a statement of affairs, including a deficiency account. B. Compute the estimated dividend to be paid general unsecured creditors.
Prost Company has filed a bankruptcy petition. Its account balances at December 31, 2012, are presented here: Cash Notes Receivable $ 2,500 60,000 76,000 Accounts Receivable (net) Inventories Finished Goods Work in Process 43,000 60,000 Raw Materials Prepaid Expenses Investment in Stock 51,000 4,000 12,000 Land 140,000 400,000 10,000 $858,500 Properny and Equipment (net) Goodwill Total Accounts Payable Accrued Wages (all with priority) Bank Notes Payable Mongage Payable Common Stock $220,000 45,000 225,000 350,000 380,000 (361,500) $858 500 Retained Earnings (deficit) Total The following additional information is available: 1. All notes receivable with the exception of one for $2,500 are expected to be collected. The notes receivable are pledged as security on the bank notes payable. 2. Of the total accounts receivable, $55,000 is expected to be collected. The accounts receivable are aso pledged as security on the bank notes payable. 3. Finished goods can be sold at 30% above cost. Selling expenses will be approximately 15% of selling price. Work in process is to be completed at an additional cost of $30,000, of which $19,000 represents the cost of raw materials. The expected selling price of the work in process (after completion) is 10% above cost, with selling expenses of 15% of selling price. Unused raw materials can be sold for $18,000. 4. Prepaid expenses are fully recoverable. 5. The investment in stock consists of 100 shares of MBI Company with a current market value of $19,000. 6. Land is appraised at $200,000, and plant and equipment is appraised at $205,000. The land and plant and equipment serve as collateral on the mortgage payable. Accrued but unrecorded interest on the mortgage payable amounts to $3,000. Required A. Prepare a statement of affairs, including a deficiency account. B. Compute the estimated dividend to be paid general unsecured creditors.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:PROBLEM 10-3 Statement of Affairs and Deficiency Account L01
Prost Company has filed a bankruptey petition. Its account balances at December 31, 2012,
are presented here:
$ 2,500
Cash
Notes Receivable
Accounts Receivable (net)
Inventories
Finished Goods
Work in Process
60,000
76,000
43,000
60,000
51,000
4,000
12,000
Raw Materials
Prepaid Expenses
Investment in Stock
Land
Property and Equipment (net)
Goodwill
Total
140,000
400,000
10,000
$858,500
Accounts Payable
Accrued Wages (all with priority)
Bank Notes Payable
Mortgage Payable
Common Stock
Retained Earnings (deficit)
Total
$220,000
45,000
225,000
350,000
380,000
(361,500)
$858,500
The following additional information is available:
1. All notes receivable with the exception of one for $2,500 are expected to be collected.
The notes receivable are pledged as security on the bank notes payable.
2. Of the total accounts receivable, $55,000 is expected to be collected. The accounts
receivable are also pledged as security on the bank notes payable.
3. Finished goods can be sold at 30% above cost. Selling expenses will be approximately
15% of selling price. Work in process is to be completed at an additional cost of $30,000,
of which $19,000 represents the cost of raw materials. The expected selling price of the
work in process (after completion) is 10% above cost, with selling expenses of 15% of
selling price. Unused raw materials can be sold for $18,000.
4. Prepaid expenses are fully recoverable.
5. The investment in stock consists of 100 shares of MBI Company with a current market
value of $19,000.
6. Land is appraised at $200,000, and plant and equipment is appraised at $205,000. The
land and plant and equipment serve as collateral on the mortgage payable. Accrued but
unrecorded interest on the mortgage payable amounts to $3,000.
Required
A. Prepare a statement of affairs, including a deficiency account.
B. Compute the estimated dividend to be paid general unsecured creditors.
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