Question

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	$	14,000
Accounts receivable (net)		87,000
Inventory		132,000
Land		122,000
Buildings (net)		322,000
Equipment (net)		224,000
Total assets	$	901,000
Liabilities and Equities
Accounts payable	$	142,000
Notes payable—current (secured by equipment)		294,000
Notes payable—long term (secured by land and buildings)		212,000
Common stock		142,000
Retained earnings		111,000
Total liabilities and equities	$	901,000

Additional Information

• If the company is liquidated, administrative expenses are estimated at $40,000.
• The accounts payable figure includes $32,000 in wages earned by the company's 12 employees during May. No one earned more than $4,400.
• Liabilities do not include taxes of $36,000 owed to the U.S. government.
• Company officials estimate that 32 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $102,000. The land and buildings will be sold together for approximately $354,000; the equipment should bring $152,000 at auction.

Prepare a statement of financial affairs for Limestone Company as of June 3, 2017.

Answer 1