Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Textbook Question
Chapter 13, Problem 45P
The following
LIMESTONE COMPANY Balance Sheet June 3, 2017 Assets |
|
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 3,000 |
65,000 | |
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 88,000 |
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 100,000 |
Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 300,000 |
Equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 180,000 |
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $736,000 |
Liabilities and Equities | |
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 98,000 |
Notes payable—current | |
(secured by equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 250,000 |
Notes payable—long term | |
(secured by land and buildings) . . . . . . . . . . . . . . . . . . . . . . . . . . . | 190,000 |
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 120,000 |
78,000 | |
Total liabilities and equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $736,000 |
Additional Information
- If the company is liquidated, administrative expenses are estimated at $18,000.
- The accounts payable figure includes $10,000 in wages earned by the company’s 12 employees during May. No one earned more than $2,200.
- Liabilities do not include taxes of $14,000 owed to the U.S. government.
- Company officials estimate that 40 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $80,000. The land and buildings will be sold together for approximately $310,000; the equipment should bring $130,000 at auction.
Prepare a statement of financial affairs for Limestone Company as of June 3, 2017.
Expert Solution & Answer
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Chapter 13 Solutions
Advanced Accounting
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