Question

Help Save & EN Submit Check my work 3 The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2020, the date on which the company is to file a voluntary petition of bankruptcy: 6.68 points eBook Print LIMESTONE COMPANY Balance sheet June 3, 2020 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 $ 13,000 75,000 108,000 110,000 310,000 200,000 $ 816,000 $ 118,000 270,000 200,000 130.000 98,000 $ 816,000 Additional Information . If the company is liquidated, administrative expenses are estimated at $28,000. • The accounts payable figure includes $20,000 in wages earned by the company's 12 employees during May. No one earned more than $3,200. • Liabilities do not include taxes of $24,000 owed to the U.S. government. Company officials estimate that 34 percent of the accounts receivable will be collected in a liquidation and that the inventory . MC 3 of 3 Next

Answer 1

LIMESTONE COMPANY
Statement of Financial Affairs
June 3,2020
Book Value	Assets		Available for Unsecured Creditors
	Pledged with Fully Secured Creditors:
$4,20,000	Land and buildings	$3,30,000
	Less: Notes payable-long‑term	-$2,00,000	$1,30,000
	Pledged with Partially Secured Creditors:
$2,00,000	Equipment	$1,40,000
	Less: Notes payable—current	-$2,70,000	-
	Free Assets:
$13,000	Cash		$13,000
$75,000	Accounts receivable		$25,500
$1,08,000	Inventory		$90,000
	Total amount available to pay liabilities with priority and unsecured creditors		$2,58,500
	Less: Liabilities with priority		-$72,000
	Available for unsecured creditors		$1,86,500
	Estimated deficiency		$41,500
$8,16,000			$2,28,000
Book Value	Liabilities and Stockholders' Equity		Unsecured Nonpriority liabilities
	Liabilities with Priority:
	Administrative expenses	$28,000
$20,000	Salaries payable	$20,000
	Taxes payable	$24,000
	Total	$72,000
	Fully Secured Creditors:
$2,00,000	Notes payable - long‑term	$2,00,000
	Less: Land and buildings	-$3,30,000	-
	Partially Secured Creditors:
$2,70,000	Notes payable current	$2,70,000
	Less: Equipment	-$1,40,000	$1,30,000
	Unsecured Creators:
$98,000	Accounts payable (other than salaries)		$98,000
$2,28,000	Stockholders' equity		-
$8,16,000			$2,28,000

For clear understanding of concept here i have provided the notes. please refer the same.

Notes

1. Book Value of Land And building

Particulars	Amount
Book Value of Land And building
land	$1,10,000
Building	$3,10,000
Total	$4,20,000

2. Book Value of equipment

Book Value of equipment

$2,00,000

3.Account Receivable for unsecured creditor

Account Receivable for unsecured creditor	$25,500
75000*34%

4. Inventory available for unsecured creditor

Inventory available for unsecured creditor

$90,000

5. Liabilities with priority

Administrative expenses	$28,000
Salaries payable	$20,000
Taxes payable	$24,000
Total	$72,000

6.Account Payable other than salaries

Account Payable	$1,18,000
Less Salaries	-$20,000
Total	$98,000