Bridges Furniture Store is finding it increasingly difficult to meet its obligations despite satisfactory sales volume and profitability. Bridges cannot meet its working capital requirements for inventory and payments on current liabilities. Finally, after pledging all of its installment receivables for an additional loan, Bridges failed to meet the bills due on October 10, 2020. Bridge's management believes that if the company could obtain an extension of time in which to pay its obligations, it would be able to make all payments in full. Creditors want to know how much they would receive if the company liquidated. The pre-closing trial balance for the current calendar year of the company on September 30, 2020, follows: Debt Credit Cash 6,360 Installment receivables, pledged 645,000 Allowance for doubtful installment receivables 40,320 Accounts receivable 62,490 Allowance for doubtful accounts 3,150 Inventories, January 1, 2020 453,450 Prepaid Insurance 4,470 Autos and trucks 67,140 Accumulated depreciation, autos and trucks 44,880 Furniture and equipment 37,500 Accumulated depreciation, furniture and equipment 6,420 Buildings 269,280 Accumulated depreciation, buildings 22,590 Land 30,720 Organization cost 2,640 Trade accounts payable 396,300 Furniture and equipment loan payable 17,400 Installment loan on auto and trucks 30,000 Bank loan, secured by installment receivables 483,750 Taxes payable (prior years) 42,660 Accrued salaries and wages 14,040 Accrued interest 32,970 Notes payable , shareholders 300,000 Mortgage payable, 6% 147,000 Capital stock 300,000 Retained earnings 195,870 Sales 2,126,700 Purchases 1,582,890 Other expenses and income, net 650,370 Total 4,008,180 4,008,180 Further investigation produced the following additional data: 1. Depreciation, allowances for doubtful accounts, prepaid and accrued items are all adjusted as of September 30, 2020 2. All installment receivables are pledged with the bank on September 30, 2020. Bridges estimates that a forced liquidation will result in a loss of $120,000 of the receivables' face amount. 3. Accounts receivable are not pledged, and Bridges estimates collectibility of $49,500 on a liquidation basis. 4. The inventory on hand will likely provide only $300,000 in a forced liquidation 5. Cancellation of the insurance will provide $2,970 6. All autos and trucks are pledged as security for an installment loan, and their total market value is $24,000 7. The store was remodeled in 2019, and the furniture and equipment are financed by a loan; the furniture and equipment is pledged as security for the loan. Because of its specialized nature, Bridges estimates that a forced sale would realize no more than $15,000 8. The land and buildings are subject to a 6 percent mortgage, on which interest on the outstanding mortgage balance has been paid to July 30, 2020. It is estimated the property could be sold for $225,000 9. The accrued salaries and wages do not exceed statutory limits 10. The notes payable to shareholders are unsecured and not subordinated to general creditors. The notes carry a 6 percent rate of interest, but no interest has been paid since December 31, 2018 (21 months) 11. Bridges estimates the cost of liquidation proceedings to be $15,000 Required: A. Prepare a statement of affairs for Bridges Furniture Store as of September 30, 2020 B. Compute the percentages of recovery for each class of creditors if Bridges Furniture Store is forced into bankruptcy Expert Answer An expert answer will be posted here