On May 1, 2020, Rolly Industries begins liquidation activities and adopts the liquidation basis of accounting. The book value of its reported assets total $700,000, including $10,000 in cash, and the book value of its liabilities, consisting of bank loans, total $600,000. Expected proceeds from reported assets other than cash are:

• Receivables, $50,000
• Inventories, $150,000
• Plant and equipment, $300,000

Previously unreported identifiable intangible assets have a fair value of $80,000. Expected costs of liquidating assets are $20,000, and negotiations are in process to reduce Rollys bank loans by 25%.

During the two months ending June 30, 2020, the following transactions occur:

• Receivables of $48,000 are collected and the rest are determined to be uncollectible.
• Inventories are sold for $100,000.
• Plant and equipment is sold for $125,000.
• The identifiable intangible assets are sold for $72,000.
• Liquidation costs of $10,000 are paid.
• Bank loans of $325,000 are paid, and creditors holding $275,000 of loans agree to accept $250,000 as full payment.
• Fair values of remaining assets other than cash are:
• Inventories, $55,000
• Plant and equipment, $185,000
• Estimated future liquidation costs are $6,000

1. On the statement of net assets in liquidation at June 30, 2020, total assets are:

a. $240,000

b. $266,000

c. $260,000

d. $250,000

2. On the statement of net assets in liquidation at June 30, 2020, total liabilities are:

a. $256,000

b. $250,000

c. $264,000

d. $275,000