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Sokolov Company was founded in Year 1. It acquired $45,000 cash by issuing stock to investors and an additional $15,000 cash by borrowing from creditors.
Sokolov Company was founded in Year 1. It acquired $45,000 cash by issuing stock to investors and an additional $15,000 cash by borrowing from creditors. During Year 1 it received $25,000 cash revenues and paid $32,000 in cash expenses. The company then went out of business.
Required:
a) Explain the term, "business liquidation."
b) What amount of cash should Sokolov Company have had on hand immediately before going out of business?
c) What amount of cash will Sokolovs creditors receive?
d) What amount of cash will Sokolovs stockholders receive?
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