Question

CH On June 1, 2021, Bland Corporation prepared a statement of financial position just prior to going out of business. The totals for the three main components showed the following: Assets (no cash) Liabilities Shareholders' equity $ 120,000 83,000 37,000 Shortly thereafter, all of the assets were sold for cash. Required: 1. How would the statement of financial position appear immediately after the sale of the assets for cash for each of the following cases? (Enter any decreases to account balances with a minus sign.) Cash Received for the Assets Balances Immediately after Sale Assets Liabilities Shareholders' Equity Case A $ Case B Case C Case D 120,000 103,000 137.000 43,000

please explain how you got to the answer

Answer 1

Requirement:

	Cash received for assets	Balances immediately after sale
		Assets	-	Liabilities	=	Shareholders Equity
Case A	$                               120,000	$        120,000	-	$        83,000	=	$                         37,000
Case B	$                               103,000	$        103,000	-	$        83,000	=	$                         20,000
Case C	$                               137,000	$        137,000	-	$        83,000	=	$                         54,000
Case D	$                                  43,000	$          43,000	-	$        83,000	=	$                       (40,000)

Note: After the sale of all assets bland corporation is left with only one asset i.e; CASH

	To creditors	To Shareholders	Total	Explanation
Case A	$        83,000	$                 37,000	$        120,000	Here the cash is enough to settle both the creditors and shareholders
Case B	$        83,000	$                 20,000	$        103,000	Here the creditors are paid in full but the shareholders are entitled only left with $ 20000
Case C	$        83,000	$                 54,000	$        137,000	Here creditors are paid in full and shareholders are left with $54000 which is more than actual equity of $37000
Case D	$        43,000	$                          -	$          43,000	Here the creditors are only paid $43000 as full settlement of total dues and shareholders are left with nothing