Jaez Corporation is in the process of going through a reorganization. As of December 31, 2017, the company’s accountant has determined the following information although the company is still several months away from emerging from the bankruptcy proceeding.
Book Value | Fair Value | |||||
Assets | ||||||
Cash | $ | 28,000 | $ | 28,000 | ||
Inventory | 50,000 | 52,000 | ||||
Land | 155,000 | 215,000 | ||||
Buildings | 225,000 | 265,000 | ||||
Equipment | 159,000 | 162,000 | ||||
Allowed Claims |
Expected Settlement |
|||||
Liabilities as of the date of the order for relief | ||||||
Accounts payable | $ | 128,000 | $ | 25,000 | ||
Accrued expenses | 35,000 | 9,000 | ||||
Income taxes payable | 27,000 | 23,000 | ||||
Note payable (due 2020, secured by land) | 105,000 | 105,000 | ||||
Note payable (due 2022) | 175,000 | 85,000 | ||||
Liabilities since the date of the order for relief | ||||||
Accounts payable | $ | 65,000 | ||||
Note payable (due 2019) | 115,000 | |||||
Stockholders' equity | ||||||
Common stock | $ | 205,000 | ||||
Deficit | (238,000 | ) | ||||
Prepare a balance sheet in appropriate form. (Negative amounts should be indicated by a minus sign.)
Balance sheet | |||||
Particulars | Amount | Amount | |||
Assets | |||||
current assets | |||||
cash | $ 28,000.00 | ||||
inventory | $ 50,000.00 | $ 78,000.00 | |||
Non current assets | |||||
Land | $ 1,55,000.00 | ||||
Building | $ 2,25,000.00 | ||||
Euipments | $ 1,59,000.00 | $ 5,39,000.00 | |||
Total Assets | $ 6,17,000.00 | ||||
Laibilities and stockholder's equity | |||||
current laibilities | |||||
Accounts payables | $ 65,000.00 | $ 65,000.00 | |||
non currentlabilities | |||||
notes payable (2019) | $ 1,15,000.00 | ||||
notes payable (2020 secured by land) | $ 1,05,000.00 | $ 2,20,000.00 | |||
laibility not subject to compromise | $ 2,85,000.00 | ||||
laibilities subject to compromise | |||||
Accounts payables | $ 1,28,000.00 | ||||
accrued expenses | $ 35,000.00 | ||||
income tax payable | $ 27,000.00 | ||||
notes payable (2022) | $ 1,75,000.00 | $ 3,65,000.00 | |||
total laibilities | $ 6,50,000.00 | ||||
stockholer's equity | |||||
common stock | $ 2,05,000.00 | ||||
retained earning | $ -2,38,000.00 | $ -33,000.00 | |||
total laibilities & stockholder's deficit | $ 6,17,000.00 |
Jaez Corporation is in the process of going through a reorganization. As of December 31, 2017,...
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