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On July 1, you were appointed receiver for the XYZ Company, which is in Chapter 7 bankruptcy. XYZs balance sheet on July 1 is as
- On July 1, you were appointed receiver for the XYZ Company, which is in Chapter 7 bankruptcy. XYZs balance sheet on July 1 is as follows:
Assets |
| Liabilities and Equity |
|
Cash | $ 5,000 | Loan payable | $170,000 |
Accounts receivable | 50,000 | Note payable | 40,000 |
Merchandise | 40,000 | Equity (deficit) | (15,000) |
Equipment | 100,000 |
| ______ |
Total | $195,000 | Total | $195,000 |
The note is secured by the equipment. All other liabilities are unsecured. During the next two months, you completed the following transactions:
- Collected $45,000 on the accounts receivable.
- The remainder are considered uncollectible.
- Sold half the merchandise for $25,000.
- The remaining merchandise is expected to yield $18,000.
- Sold the equipment for $110,000.
- Used the proceeds from the sale of the equipment to pay the note.
- Accrued administrative expenses of $5,000.
- Paid $140,000 on the loan.
Using a separate document preferably a spreadsheet, prepare the statements listed below. Be sure to follow the file naming and formatting guidance presented.
- Prepare a statement of realization and liquidation.
- Prepare the statement of estate deficit.
- Prepare the receivers balance sheet.
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