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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) $ 13,000 86,000 130,000 121,000 321,000 222,000 $ 893,000 $ 140,000 292,000

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) $ 13,000 86,000 130,000 121,000 321,000 222,000 $ 893,000 $ 140,000 292,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 13,000 86,000 130,000 121,000 321,000 222,000 $893,000 $ $ 140,000 292,000 211,000 141,000 109,000 $ 893,000 Additional Information • If the company is liquidated, administrative expenses are estimated at $39,000. • The accounts payable figure includes $31,000 in wages earned by the company's 12 employees during May. No one earned more than $4,300. • Liabilities do not include taxes of $35,000 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 $101,000. The land and buildings will be sold together for approximately $352,000; the equipment should bring $151,000 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 13,000 86,000 130,000 121,000 321,000 222,000 $893,000 $ $ 140,000 292,000 211,000 141,000 109,000 $ 893,000 Additional Information • If the company is liquidated, administrative expenses are estimated at $39,000. • The accounts payable figure includes $31,000 in wages earned by the company's 12 employees during May. No one earned more than $4,300. • Liabilities do not include taxes of $35,000 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 $101,000. The land and buildings will be sold together for approximately $352,000; the equipment should bring $151,000 at auction. Prepare a statement of financial affairs for Limestone Company as of June 3, 2020.
Book Values LIMESTONE COMPANY Statement of Financial Affairs June 3, 2020 $ 442,000 Land and buildings $ 893,000 Book Values Pledged with Fully Secured Creditors: 222,000 Equipment $ 31,000 0 0 Assets Less: Notes payable-long term Pledged with Partially Secured Creditors: 13,000 86,000 Accounts receivable 130,000✔ Inventory 0 Less: Notes payable-current Free Assets: Cash Total amount available to pay liabilities with priority and unsecured creditors Less: Liabilities with priority Available for unsecured creditors Estimated deficiency Liabilities and Stockholders' Equity Liabilities with Priority: Administrative expenses Salaries payable Taxes payable Total Fully Secured Creditors: 211,000✔ Notes payable-long term Less: Land and buildings Partially Secured Creditors: 292,000✔ Notes payable current Less: Equipment Unsecured Creditors: 109,000✔ Accounts payable 250,000 Stockholders' equity 893,000 ✓$ 352,000✔ ✓ ›› › › › ✓ ✓ ✓ ✓ › › › ✓$ ✓ ›› ›› ✓ 3 211,000 $ 141,000 151,000 ✓ 292,000✔ 39,000✔ 31,000 ✓ 35,000✔ $ 105,000 Available for Unsecured Creditors 211,000✔ 352,000✔ 0 13,000✔ 25,800✔ 101,000✔ $280,800 (105,000)✓ $ 175,800 (53,200) X 122,600 Unsecured Nonpriority Liabilities 0✓ 292,000✔ 151,000 $ 141,000 109,000✔ 0 0✓ 250,000
Transcribed Image Text:Book Values LIMESTONE COMPANY Statement of Financial Affairs June 3, 2020 $ 442,000 Land and buildings $ 893,000 Book Values Pledged with Fully Secured Creditors: 222,000 Equipment $ 31,000 0 0 Assets Less: Notes payable-long term Pledged with Partially Secured Creditors: 13,000 86,000 Accounts receivable 130,000✔ Inventory 0 Less: Notes payable-current Free Assets: Cash Total amount available to pay liabilities with priority and unsecured creditors Less: Liabilities with priority Available for unsecured creditors Estimated deficiency Liabilities and Stockholders' Equity Liabilities with Priority: Administrative expenses Salaries payable Taxes payable Total Fully Secured Creditors: 211,000✔ Notes payable-long term Less: Land and buildings Partially Secured Creditors: 292,000✔ Notes payable current Less: Equipment Unsecured Creditors: 109,000✔ Accounts payable 250,000 Stockholders' equity 893,000 ✓$ 352,000✔ ✓ ›› › › › ✓ ✓ ✓ ✓ › › › ✓$ ✓ ›› ›› ✓ 3 211,000 $ 141,000 151,000 ✓ 292,000✔ 39,000✔ 31,000 ✓ 35,000✔ $ 105,000 Available for Unsecured Creditors 211,000✔ 352,000✔ 0 13,000✔ 25,800✔ 101,000✔ $280,800 (105,000)✓ $ 175,800 (53,200) X 122,600 Unsecured Nonpriority Liabilities 0✓ 292,000✔ 151,000 $ 141,000 109,000✔ 0 0✓ 250,000
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