Problem 13-51 (Algo) (LO 13-4, 13-6) 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 entire inventory can be sold for only $35,900. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Debit Credit $ 35,900 $ 26,100 50,600 18, 100 8,270 4,210 81,300 1,220 52,500 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 32,300 111,000 15,300 11,700 70, 100 156,010 1,110 123,000 5, 120 $401,920 $401,920 Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $77,500, and the equipment is worth $20,400. The investments represent shares of a nationally traded company that can be sold at the current time for $23,500. Administrative expenses necessary to carry out a liquidation would approximate $16,500. Prepare a statement of financial affairs for Lynch, Inc., as of March 14, 2020. LYNCH, INC. Statement of Financial Affairs March 14, 2020 Book Values Assets Available for Unsecured Creditors Pledged with Fully Secured Creditors: Land and building Less: Notes payable Pledged with Partially Secured Creditors: $ 77,500 70,100 $ 7,400 Free Assets: Total available to pay liabilities with priority and unsecured creditors $ 7,400 $ 7,400 Available for unsecured creditors Estimated deficiency 0 $ Book Values $ 7,400 Unsecured Nonpriority Liabilities Liabilities and Stockholders' Equity Liabilities with Priority: $ 0 Total Fully Secured Creditors: Partially Secured Creditors: $ 0 Unsecured Creditors: Stockholders' equity 0 $ $