15.2

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15.4

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Farmworth Company entered b. Prepare a statementul LO 2 E15.2 Liquidation Basis of Accounting (see related Exercise E15.1) liquidation on March 1, 2020. Initial values are in Exercise E15.1. During the three months ending June 1. 2020, the company collected $10,000 in receivables, sold inventory for $30,000, and paid liquidation costs of $12,000. Reported liabilities of $30,000 were paid. At the end of three months, estimated valua tions on remaining assets and liabilities are as follows: 1. Expected proceeds from reported assets other than cash are: Inventory $20,000 Plant and equipment, $160,000 2. Newly identified unreported assets can be liquidated for an estimated $8,000. 3. Expected costs of liquidating assets are $18,000. 4. A creditor holding a loan with a book value of $25,000 agrees to accept $15,000 as full payment. Receivables, $22,000 Required a. Prepare a statement of changes in net assets in liquidation as of June 1, 2020. b. Prepare a statement of net assets in liquidation as of June 1, 2020. MERC E15.4 Deficiency to Unsecured Creditors Consider the following information for Evans, Inc. when the LO 3 company entered bankruptcy proceedings: Balance per Books Account Dr (Cr) Cash. Accounts receivable Inventory. Prepaid expenses. Buildings, net Equipment, net Goodwill Wages payable. Taxes payable Accounts payable Notes payable Common stock. Retained earnings-deficit. Total .. $ 31,700 646,800 320,000 10.600 750,000 123.500 88,000 (77.300) (30,900) (967.300) (205,400) (1.200,000) 510,300 0 Inventory with a book value of $240,000 and realizable value of $175.000 is security for notes payable of $145,000. The equipment secures the remaining notes payable. Expected realizable values of the assets are: Accounts receivable.. Inventory Buildings.. Equipment $300,000 200,000 250,000 40,000 The prepaid expenses and goodwill have a realizable value of zero. The entire wages payable balance is a priority liability Required Compute the estimated deficiency to unsecured creditors