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inventory can be sold for only $33,800. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Accounts payable. Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 25,000 81,800 1,070 32,300 113,000 17,000 12,000 146,000 $428,170 $ Credit 33,800 50,500 16,200 8,290 4,020 51,900 71,500 185,870 1,050 5,040 $ 428,170 Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $76,700, and the equipment is worth $20,800. The investments represent shares of a nationally traded company that can be sold at the current time for $22,100. Administrative expenses necessary to carry out a liquidation would approximate $18,000.

inventory can be sold for only $33,800. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Accounts payable. Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 25,000 81,800 1,070 32,300 113,000 17,000 12,000 146,000 $428,170 $ Credit 33,800 50,500 16,200 8,290 4,020 51,900 71,500 185,870 1,050 5,040 $ 428,170 Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $76,700, and the equipment is worth $20,800. The investments represent shares of a nationally traded company that can be sold at the current time for $22,100. Administrative expenses necessary to carry out a liquidation would approximate $18,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare a statement of financial affairs for Lynch, Inc., as of March 14, 2020. Book Values $ 0 $ Pledged with Fully Secured Creditors: Free Assets: Pledged with Partially Secured Creditors: LYNCH, INC. Statement of Financial Affairs March 14, 2020 > Show Transcribed Text Assets. Total available to pay liabilities with priority and unsecured creditors Book Values Available for unsecured creditors Estimated deficiency 0 Liabilities and Stockholders' Equity Liabilities with Priority: Total Fully Secured Creditors: Partially Secured Creditors: Unsecured Creditors: < Prev Stockholders' equity Available for Unsecured Creditors $ $ $ $ 0 $ 0 0 0 18 of 20 ⠀ Unsecured Nonpriority Liabilities $ Next > $ 0 0
Transcribed Image Text:Prepare a statement of financial affairs for Lynch, Inc., as of March 14, 2020. Book Values $ 0 $ Pledged with Fully Secured Creditors: Free Assets: Pledged with Partially Secured Creditors: LYNCH, INC. Statement of Financial Affairs March 14, 2020 > Show Transcribed Text Assets. Total available to pay liabilities with priority and unsecured creditors Book Values Available for unsecured creditors Estimated deficiency 0 Liabilities and Stockholders' Equity Liabilities with Priority: Total Fully Secured Creditors: Partially Secured Creditors: Unsecured Creditors: < Prev Stockholders' equity Available for Unsecured Creditors $ $ $ $ 0 $ 0 0 0 18 of 20 ⠀ Unsecured Nonpriority Liabilities $ Next > $ 0 0
Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The entire inventory can be sold for only $33,800. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable. Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 25,000 81,800 1,070 32,300 113,000 17,000 12,000 146,000 $428,170 $ Credit 33,800 50,500 16,200 8,290 4,020 51,900 71,500 185,870 1,050 5,040 $ 428,170 Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $76,700, and the equipment is worth $20,800. The investments represent shares of a nationally traded company that can be sold at the current time for $22,100. Administrative expenses necessary to carry out a liquidation would approximate $18,000.
Transcribed Image Text:Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The entire inventory can be sold for only $33,800. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable. Building Cash Common stock Equipment Inventory Investments Land Note Payable Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals Debit $ 25,000 81,800 1,070 32,300 113,000 17,000 12,000 146,000 $428,170 $ Credit 33,800 50,500 16,200 8,290 4,020 51,900 71,500 185,870 1,050 5,040 $ 428,170 Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $76,700, and the equipment is worth $20,800. The investments represent shares of a nationally traded company that can be sold at the current time for $22,100. Administrative expenses necessary to carry out a liquidation would approximate $18,000.
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