Question

Problem 13-45 (LO 13-4, 13-6) The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2017, the date on which the company is to file a voluntary petition of bankruptcy: LIMESTONE COMPANY Balance Sheet June 3, 2017 Assets Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total assets Liabilities and Equities Accounts payable Notes payable-current (secured by equipment) Notes payable-long term (secured by land and buildings) Common stock Retained earnings Total liabilities and equities $ 5,000 67,000 92,000 Y 102,000 +302,000 184,000 $ 752,000 $ 102,000 254,000 192,000 122,000 82,000 $ 752,800 Additional Information Prev 2 of 3 !!! Next >

Answer 1

Limestone Company
Statement of Financial Affairs
June 3,2017
Book Value	Assets		Amount available for unsecured creditors
	Pledged with fully secured creditors
$                          4,04,000.00	Land & Building	$                          3,14,000.00
	Less: Notes Payable-Long term	$                        -1,92,000.00	$                 1,22,000.00
	Pledged with Partially secured creditors
$                          1,84,000.00	Equipment	$                          1,32,000.00
	Less: Notes Payable -Current	$                        -2,54,000.00	$                                    -
	Free Assets
$                                5,000.00	Cash		$                       5,000.00
$                              67,000.00	Accounts Receivable($67000*30%)		$                     20,100.00
$                              92,000.00	Inventory		$                     82,000.00
	Total amount available to pay liabilities with priority and unsecured creditors		$                 2,29,100.00
	Less: Liabilities with priority(Calculation below)		$                   -48,000.00
	Amount available for unsecured creditors($229000-$48000)		$                 1,81,100.00
	Estimated deficiency(Total Liabilities-Amount available for unsecured creditors)=($212000-$181100)		$                     30,900.00
$                          7,52,000.00			$                 2,12,000.00
	Liabilities and Stockholder's Equity
	Administrative Expenses	$                             20,000.00
$                              12,000.00	Salaries Payable	$                             12,000.00
	Taxes Payable	$                             16,000.00
	Total	$                             48,000.00
	Fully Secured Creditors
$                          1,92,000.00	Notes Payable -Long Term	$                          1,92,000.00
	Less: Land & Building	$                        -3,14,000.00	$                                    -
	Partially Secured Creditors
$                          2,54,000.00	Notes Payable-Current	$                          2,54,000.00
	Less: Equipment	$                        -1,32,000.00	$                 1,22,000.00
	Unsecured Creditors
$                              90,000.00	Accounts Payable(Other than Salaries)		$                     90,000.00
$                          2,04,000.00	Stockholder's equity		$                                    -
$                          7,52,000.00			$                 2,12,000.00
	Book Value of Land & Building
	Land	$                          1,02,000.00
	Building	$                          3,02,000.00
	Book Value of Land & Building	$                          4,04,000.00
	Liabilities with Priority
	Administrative Expenses	$                             20,000.00
	Accounts Payable includes wages of 12 employees	$                             12,000.00
	Taxes to U.S Government	$                             16,000.00
	Total	$                             48,000.00
	Liabilities with priority must be paid before unsecured creditors in case of liquidation.