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 $34,500. The following is a trial balance as of March 14, 2020, the day the company files for a Chapter 7 liquidation: Debit Credit $ 34,500 $ 26,200 52,800 16,700 8,220 4,130 82,600 1,230 50,500 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 31,500 128,000 16,000 10,300 71,300 174,470 1,160 123,000 5,050 $418,830 $ 418,830 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 $77,000, and the equipment is worth $19,700. The investments represent shares of a nationally traded company that can be sold at the current time for $21,200. Administrative expenses necessary to carry out a liquidation would approximate $18,500. 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: $ 0 Pledged with Partially Secured Creditors: Free Assets: Total available to pay liabilities with priority and unsecured creditors $ 0 $ 0 Available for unsecured creditors Estimated deficiency 0 $ Book Values Liabilities and Stockholders' Equity $ 0 Unsecured Nonpriority Liabilities Liabilities with Priority: $ 0 Total Fully Secured Creditors: Partially Secured Creditors: $ 0 Unsecured Creditors: Stockholders' equity 0 $ $ 0