Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. Following is a trial balance as of March 14, 2017 Debit Credit $ 35,000 $ 29,000 52,000 18,000 10,000 6,000 82,000 3,000 56,000 Accounts payable Accounts receivable Accumulated depreciation, building Accumulated depreciation, equipment Additional paid-in capital Advertising payable Building Cash Common stock Equipment Inventory Investments Land Note Payable-Colorado Savings and Loan (secured by lien on land and building) Note Payable-First National Bank (secured by equipment) Payroll taxes payable Retained earnings (deficit) Salaries payable (owed equally to two employees) Totals 36,000 104,000 17,000 12,000 72,000 154,000 3,000 130,000 7,000 $ 413,000 $413,000 Assume that the company will be liquidated and the following transactions will occur: Assume that the company will be liquidated and the following transactions will occur Accounts receivable of $20,000 are collected with remainder written off. . All of the company's inventory is sold for $42,000. Additional accounts payable of $12,000 incurred for various expenses such as utilities and maintenance are discovered. The land and building are sold for $75,000. The note payable due to the Colorado Savings and Loan is paid. The equipment is sold at auction for only $13,000 with the proceeds applied to the note owed to the First National Bank. . The investments are sold for $25,000. Administrative expenses total $22,000 as of July 23, 2017, but no payment has yet been made. a. Prepare a statement of realization and liquidation for the period from March 14, 2017, through July 23, 2017 b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $3,000? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a statement of realization and liquidation for the period from March 14, 2017, through July 23, 2017. (Negative amounts should LYNCH, INC. Statement of Realization and Liquidation March 14, 2017 to July 23, 2017 Liabilities Fully Partially Noncash Unsecured Cash with Secured Secured Nonpriority Assets Priority Creditors Creditors Liabilities Book balances, 3/14/17 Accounts receivable collected remaining balance assumed to be uncollectible Inventory sold Accounts payable discovered Land and buildings all sold Fully secured note paid Equipment sold Payment made on partially secured debt Investments sold Administrative expenses accrued Remaining partially secured claims reclassified as unsecured liabilities Final balances remaining for unsecured creditors $ $ 0 $ 0 $ 0 $ 0 $ 0 a. Prepare a statement of realization and liquidation for the period from March 14, 2017, through July 23, 2017 b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $3,000? Complete this question by entering your answers in the tabs below. Required A Required B How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $3,000? (Round your percentage claim for unsecured liabilities to the nearest whole percent.) Cash paid Required A Required B
