The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2020, the date on which the company is to file a voluntary petition of bankruptcy: LIMESTONE COMPANY Balance Sheet June 3, 2020 Assets Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total assets Liabilities and Equities Accounts payable Notes payable-current (secured by equipment) Notes payable-long-term (secured by land and buildings) Common stock Retained earnings Total liabilities and equities $ 12,000 85,000 128,000 120,000 320,000 220,000 $ 885,000 $ 138,000 290,000 210,000 140,000 107,000 $ 885,000 Additional Information If the company is liquidated, administrative expenses are estimated at $38,000. The accounts payable figure includes $30,000 in wages earned by the company's 12 employees during May. No one earned more than $4,200. Liabilities do not include taxes of $34,000 owed to the U.S. government. Company officials estimate that 38 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $100,000. The land and buildings will be sold together for approximately $350,000; the equipment should bring $150,000 at auction. Prepare a statement of financial affairs for Limestone Company as of June 3, 2020. Answer is not complete. LIMESTONE COMPANY Statement of Financial Affairs June 3, 2020 Book Values Assets Available for Unsecured Creditors $440,000 $ 350,000 210.000 IS 140,000 Pledged with Fully Secured Creditors: Land and buildings Less: Notes payable-long term Pledged with Partially Secured Creditors: Equipment Less: Notes payable-current Free Assets Cash 220,000 150.000 OC 0 12,000 12.000 OC 100.000 32.300 $ 284,300 128,000 Inventory 85.000 Accounts receivable Total amount available to pay liabilities with priority and unsecured creditors Less: Liabilities with priority Available for unsecured creditors Estimated deficiency s885,000 30,000 $ 254,300 65.700 S 320.000 Unsecured Nonpriority Liabilities Book Values Liabilities and Stockholders' Equity IS Liabilities with Priority: Administrative expenses Salaries payable Taxes payable S 30.000 Solo 38,000 30.000 34,000 $ 102,000 210,000 >IS 210.000 (350.000) 0 Total Fully Secured Creditors: Notes payable-long term Less: Land and buildings Partially Secured Creditors: Notes payable current Less: Equipment Unsecured Creditors: Accounts payable 290,000 290.000 (150.000) $ 140,000 108,000 108,000 0 Stockholders' equity 247.000 |s385 000 102.000 X $ 350,000
