QUALITATIVE ANALYSIS: (Total Point Value 80) It is advisable to document all your work and calculations as applicable.

1) Volunteer, Inc. is in the process of liquidating and going out of business. The firm has $34,910 in cash, inventory totaling $107,000, accounts receivable of $72,000, plant & equipment with a $192,000 book value, and total liabilities of $307,000. It is estimated that the inventory can be disposed of in a liquidation sale for 75% of its cost, all but 15% of the accounts receivable can be collected, and plant & equipment can be sold for $210,000.

Calculate the amount of cash that would be available to the owners if the accounts receivable are collected, the other assets are sold as described, and the liabilities are paid off in full.

2) Using the column headings provided below, show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name, amount, and indicating whether it is an addition (+) or subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting owners' equity.

(1.) The firm borrowed $2,000 from the bank; a short-term note was signed.

(2.) Merchandise inventory costing $750 was purchased; the cash of $200 was paid and the balance is due in 30 days.

(3.) Employee wages of $1,000 were accrued at the end of the month.

(4.) Merchandise that cost $350 was sold for $450 in cash.

(5.) This month's rent of $700 was paid.

(6.) Revenues from services during the month totaled $6,500. Of this amount, $2,000 was received in cash and the balance is expected to be received within 30 days.

(7.) During the month, supplies were purchased at a cost of $520 and debited into the Supplies (asset) account. A total of $400 of supplies was used during the month.

(8.) The interest of $240 has been earned on a note receivable but has not yet been received.

Transaction/ Situation Owners' Equity Assets Liabilities Net Income