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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.
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. The following is a trial balance as of March 14, 2020. Debit Credit Accounts payable $ 47,000 Accounts receivable $ 53,000 Accumulated depreciation, building 64,000 Accumulated depreciation, equipment 30,000 Additional paid-in capital 22,000 Advertising payable 18,000 Building 94,000 Cash 15,000 Common stock 92,000 Equipment 72,000 Inventory 128,000 Investments 29,000 Land 24,000 Note Payable-Colorado Savings and Loan (secured by lien on land and building) 84,000 Note Payable-First National Bank (secured by equipment) 178,000 Payroll taxes payable 15,000 Retained earnings (deficit) 154,000 Salaries payable (owed equally to two employees) 19,000 Totals $569,000 $569,000 Assume that the company will be liquidated and the following transactions will occur: Accounts receivable of $32,000 are collected with remainder written off. All of the company's inventory is sold for $54,000. Additional accounts payable of $24,000 incurred for various expenses, such as utilities and maintenance, are discovered. The land and building are sold for $99,000. The note payable due to the Colorado Savings and Loan is paid. The equipment is sold at auction for only $25,000 with the proceeds applied to the note owed to the First National Bank. The investments are sold for $49,000. Administrative expenses total $34,000 as of July 23, 2020, but no payment has been made yet. a. Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $6,000? Answer is not complete. Complete this question by entering your answers in the tabs below. Required Required A B Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020. (Negative amounts should be indicated by a minus sign.) LYNCH, INC. Statement of Realization and Liquidation March 14, 2020 to July 23, 2020 Liabilities Noncash Fully Cash with Secured Assets Priority Creditors $ 15,000 32,000 (53,000) Partially Secured Creditors Unsecured Nonpriority Liabilities Stockholders' Equity (Deficits) 54,000|(128,000) Book balances, 3/14/20 Accounts receivable collectedremaining 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 99,000 (54,000) (84,000 25,000 (5,000 X (25,000 49,000 (29,000 Final balances remaining for unsecured creditors $ 165,000 $ (269,000) $ 0 $ 0 $ 0 $ 0 $ DACA Complete this question by entering your answers in the tabs below. Required Required A B How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $6,000? (Round your final answer to nearest whole dollar amount.) Cash paid
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