Question
Big Co's financial position prior to liquidation is as follows: Assets: Cash 80,000 Accounts receivable 440,000 Note receivable 200,000 Inventory 1,060,000 Prepaid assets 20,000 Land
Big Co's financial position prior to liquidation is as follows:
Assets:
Cash 80,000
Accounts receivable 440,000
Note receivable 200,000
Inventory 1,060,000
Prepaid assets 20,000
Land 1,000,000
Building, net 4,000,000
equipment, net 600,000
Total 7,400,000
Liabilities and Equity
Accrued expenses 442,000
current tax payable 700,000
Accounts payable 2,000,000
Note payable 600,000
Loan payable 4,000,000
Share capital 1,000,000
Retained Earnings(deficit) (1,342,000)
Total 7,400,000
Big Co.'s liquidation is entrusted to Small, a receiver.
Information on January 1. 20x1:
-interest of 20,000 is expected to be collected on the note and interest of 30,000 is expected to be paid on the loan.
-liquidation costs of 60,000 are expected to be incurred.
Information on transactions for the six months ended June 30, 20x1:
-only 75% of the total account receivable was collected. The remaining balance was written-off
-the interest on the note was collected in full but only 180,000 was collected on the principal. the remaining balance was written off
-inventory with book value of 530,000 was sold for 590,000
-the prepaid assets were written off
-the land and building were sold for 5,200,000, while the equipment was sold for 440,000
-only 50,000 of the accrued expenses were paid. the balance remains outstanding
-the current tax payable was paid in full
-the loan payable and interest payable were paid in full
-the lender accepted 440,000 as full settlement of the note payable
-actual administrative expenses paid amounted to 54,000
Questions:
what are the journal entries of the following:
1.opening journal entries
2.new assets and liabilities
3.transactions during 20x1
what is the statement of realization and liquidation of the corp?
what is the ending balance of cash?
what is the ending balance of the estate deficit account and make a reconciliation for the computed cash balance?
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