Accounting for Special Transactions - Corporate Liquidation & Reorganization Merida Co.'s financial position prior to liquidation is as follows: ASSETS Liabilities and OE Cash 80,000 Accrued expenses 442,000 Accounts Receivable 440,000 Current tax payable 700,000 Note receivable 200,000 Accounts payable 2,000,000 Inventory 1,060,000 Note payable 600,000 Prepaid assets 20,000 Loan payable 4,000,000 Land 1,000,000 Share Capital 1,000,000 Building, net 4,000,000 Retained earnings (deficit) (1,342,000) Equipment, net 600,000 Total 7,400,000 Total 7,400,000 Merida Co's liqudaation is entrusted to Snow White, a receiver. Information on January 1, 20x1: * Interest of P20,000 is expected to be collected on the note and interest of 30,000 is expected to be paid on the loan. * Liquidation costs of P60,000 are expected to be incurred. Information on transactions for the six months ended June 30, 20x1 *Only 75% of the total account receivable was collected. The remaining balance was written off. * The interest on the note was collected in full but only P180,000 was collected on the principal. The remaining balance was written-off. * Inventory book value of P530,000 was sold for P590,000. * The prepaid assets were written-off * The land and building were sold for P5,200,000 while the equipment was sold for P440,000. * Only the 50,000 of the accrued expenses were paid. The balance remains outstanding. * The current tax payable was paid in full. * The loan payable and interest payable were paid in full. * The lender accepted P440,000 as full settlement of the note payable. * Actual administrative expenses paid amounted to P54,000. Requirements: 1. Prepare the statement of realization and liquidation. 2. Compute for the ending balance of cash
Accounting for Special Transactions - Corporate Liquidation & Reorganization
Merida Co.'s financial position prior to liquidation is as follows:
| ASSETS | Liabilities and OE | ||
| Cash | 80,000 | Accrued expenses | 442,000 |
| Accounts Receivable | 440,000 | Current tax payable | 700,000 |
| Note receivable | 200,000 | Accounts payable | 2,000,000 |
| Inventory | 1,060,000 | Note payable | 600,000 |
| Prepaid assets | 20,000 | Loan payable | 4,000,000 |
| Land | 1,000,000 | Share Capital | 1,000,000 |
| Building, net | 4,000,000 | (1,342,000) | |
| Equipment, net | 600,000 | ||
| Total | 7,400,000 | Total | 7,400,000 |
Merida Co's liqudaation is entrusted to Snow White, a receiver.
Information on January 1, 20x1:
* Interest of P20,000 is expected to be collected on the note and interest of 30,000 is expected to be paid on the loan.
* Liquidation costs of P60,000 are expected to be incurred.
Information on transactions for the six months ended June 30, 20x1
*Only 75% of the total account receivable was collected. The remaining balance was written off.
* The interest on the note was collected in full but only P180,000 was collected on the principal. The remaining balance was written-off.
* Inventory book value of P530,000 was sold for P590,000.
* The prepaid assets were written-off
* The land and building were sold for P5,200,000 while the equipment was sold for P440,000.
* Only the 50,000 of the accrued expenses were paid. The balance remains outstanding.
* The current tax payable was paid in full.
* The loan payable and interest payable were paid in full.
* The lender accepted P440,000 as full settlement of the note payable.
* Actual administrative expenses paid amounted to P54,000.
Requirements:
1. Prepare the statement of realization and liquidation.
2. Compute for the ending balance of cash
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Solved in 3 steps
