GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
13th Edition
ISBN: 9781260087383
Author: Joe Ben Hoyle
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 13, Problem 48P
The following balance sheet has been produced for Litz Corporation as of August 8, 2017, the date on which the company is to begin selling assets as part of a corporate liquidation:
LITZ CORPORATION Balance Sheet August 8, 2017 |
|
Assets | |
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $16,000 |
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 82,000 |
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 32,000 |
Inventory (net realizable value is expected to approximate cost) . . . . . . . . . . . | 69,000 |
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 30,000 |
Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 340,000 |
Equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 210,000 |
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $779,000 |
Liabilities and Equities | |
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $150,000 |
Notes payable—current (secured by inventory) . . . . . . . . . . . . . . . . . . . . . . . . . | 132,000 |
Notes payable—long term [secured by land and buildings (valued at $300,000)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 259,000 |
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 135,000 |
103,000 | |
Total liabilities and equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $779,000 |
The following events occur during the liquidation process:
- The investments are sold for $39,000.
- The inventory is sold at auction for $48,000.
- The money derived from the inventory is applied against the current notes payable.
- Administrative expenses of $15,000 are incurred in connection with the liquidation.
- The land and buildings are sold for $315,000. The long-term notes payable are paid.
- The accountant determines that $34,000 of the accounts payable are liabilities with priority.
- The company’s equipment is sold for $84,000.
- Accounts receivable of $34,000 are collected. The remainder of the receivables is considered uncollectible.
- The administrative expenses are paid.
- a. Prepare a statement of realization and liquidation for the period just described.
- b. What percentage of their claims should the unsecured creditors receive?
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Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year.Accounts …… …… …… …… …… …… …… Balances ($)Accumulated Depreciation-Building…. …… 124000Accumulated Depreciation-Equipment….…. 35000Additional Paid in Capital-Common Stock.. 237000Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 203000Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 408000Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 189120Common Stock ($2 each)…. …. …. …. …. ….. 122000Cost of Goods Sold …. …. …. …. ….. …. ….… 1083000Equipment …. …. …. …. …. …. ….. ….. ….. ….. 219000Interest Expense …. …. …. …. …. …. ….. ….. …. 21500Loss on Sale of Property …. …. …. …. …. …. 7680Merchandise Inventory …. …. ……. …. …. …. 231000Mortgage Loan …. …. …. …. …. …… …. …. …. 112000Rent Revenue …. …. …. …. …. …. … …. …. …. 51000Retained Earnings …. …. …. …. …… …. …. …. 52200Salaries and Wages Expense …. …. …. …. …. 107000Sales …. …. …. …. …. …. ….. ….. ……. …. …. …. 1752000Sales Returns…
Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year.Accounts …… …… …… …… …… …… …… Balances ($)Accumulated Depreciation-Building…. …… 125000Accumulated Depreciation-Equipment….…. 37000Additional Paid in Capital-Common Stock.. 237000Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 207000Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 407000Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 180530Common Stock ($2 each)…. …. …. …. …. ….. 105000Cost of Goods Sold …. …. …. …. ….. …. ….… 1087000Equipment …. …. …. …. …. …. ….. ….. ….. ….. 219000Interest Expense …. …. …. …. …. …. ….. ….. …. 21600Loss on Sale of Property …. …. …. …. …. …. 7520Merchandise Inventory …. …. ……. …. …. …. 226000Mortgage Loan …. …. …. …. …. …… …. …. …. 116000Rent Revenue …. …. …. …. …. …. … …. …. …. 52000Retained Earnings …. …. …. …. …… …. …. …. 51900Salaries and Wages Expense …. …. …. …. …. 106000Sales …. …. …. …. …. …. ….. ….. ……. …. …. …. 1754000Sales Returns…
Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year.
Accounts …… …… …… …… …… …… …… Balances ($)
Accumulated Depreciation-Building…. …… 123000
Accumulated Depreciation-Equipment….…. 36000
Additional Paid in Capital-Common Stock.. 220000
Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 207000
Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 406000
Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 148220
Common Stock ($2 each)…. …. …. …. …. ….. 104000
Cost of Goods Sold …. …. …. …. ….. …. ….… 1086000
Equipment …. …. …. …. …. …. ….. ….. ….. ….. 202000
Interest Expense …. …. …. …. …. …. ….. ….. …. 23100
Loss on Sale of Property …. …. …. …. …. …. 7530
Merchandise Inventory …. …. ……. …. …. …. 235000
Mortgage Loan …. …. …. …. …. …… …. …. …. 102000
Rent Revenue …. …. …. …. …. …. … …. …. …. 51000
Retained Earnings …. …. …. …. …… …. …. …. 51700
Salaries and Wages Expense …. …. …. …. …. 108000
Sales …. …. …. …. …. …. ….. ….. ……. …. …. ….…
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GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
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