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.

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…