Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 6, Problem 1SSC
To determine
To prepare: A statement of net assets in liquidation for T Corporation for December 31 of the current year.
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Jaez Corporation is in the process of going through a reorganization. As of December 31, 2024, the company’s accountant has determined the following information although the company is still several months away from emerging from the bankruptcy proceeding.
Net Book Value
Fair Value
Assets
Cash
$ 31,000
$ 31,000
Inventory
53,000
55,000
Land
164,000
218,000
Buildings
228,000
268,000
Equipment
162,000
165,000
Allowed Claims
Expected Settlement
Liabilities as of the date of the order for relief
Accounts payable
$ 131,000
$ 28,000
Accrued expenses
38,000
12,000
Income taxes payable
30,000
26,000
Note payable (due 2027, secured by land)
108,000
108,000
Note payable (due 2029)
178,000
88,000
Liabilities since the date of the order for relief
Accounts payable
$ 68,000
Note payable (due 2026)
118,000
Stockholders' equity
Common stock
$ 208,000
Deficit
(241,000)
Required:
Prepare the balance sheet for Jaez…
The Larisa Company is exiting bankruptcy reorganization with the following accounts:
The company’s assets have a $760,000 reorganization value. As part of the reorganization, the company’s owners transferred 80 percent of the outstanding stock to the creditors.
Prepare the journal entry that is necessary to adjust the company’s records to fresh start accounting.
Following an unprecedented decline in the sales for the past five years, the manufacturing business of partners A, B, and C was on the brink of bankruptcy.
On January 7, 2005, the partners decided to liquidate. C, the managing partner, spearheaded the liquidation process and utilized the most recent statement of financial position shown below as starting point:
ABC Manufacturing
Statement of Financial Position
For the year ended December 31, 2004
Assets
Cash
20,000
Investments in Trading Securities
Trade and other receivables (Note 5)
50,000
97,000
Inventories (Note 6)
Prepaid expenses (Note 7)
Property, plant, and equipment (Note 8)
65,000
3,500
219,000
Total assets
454,500
Liabilities and Partner's Equity
Trade and other payables (Note 9)
A, Capital (30%)
B, Capital (30%)
C, Capital (40%)
Total Liabilities and Partner's Equity
36,500
170,000
48,000
200,000
454,500
Additional information pertaining to liquidation process:
1. Investments in Trading Securities were realized for P30,000.…
Chapter 6 Solutions
Intermediate Accounting
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