You are a consultant in an accounting firm and one of your clients, Home Design Corporation, asks you for advice on one of its customers, Trouble Inc. Trouble Inc. is experiencing difficulty in meeting its obligations.Home Design Corporation, one of Trouble's major suppliers, has an unsecured accounts receivable from Trouble Inc. of $150,000 and would like to know if Home Design Corporation should file a petition to put Trouble into bankruptcy. Home Design Corporation gives you some information obtained from Trouble Inc. including a trial balance as at the end of January 2020 and detailed information about some of the items in the trial balance.

Trouble Inc.Trial Balance

As at January 31, 2020

Debits

Credits

Accounts receivable

148,500

Inventory

495,000

Prepaid Expenses

33,000

Fixed Assets (net)

594,000

Bank Loan Payable

429,000

Accounts Payable

275,000

Employee Payroll Taxes Payable

49,500

Mortgage Payable

451,000

Common Stock

55,000

Retained Earnings

11,000

Total

1,270,500

1,270,500

Additional Information:

1. It is estimated that $16,500 of accounts receivable are uncollectible. 148,000-16,500
2. The inventory could be sold for $412,500.The bank loan is secured by inventory.
3. Fixed assets have a market value of $550,000. The mortgage is secured by all the fixed assets.
4. Bankruptcy and trustee fees would amount to approximately $55,000.
5. Prepaid expenses would have no value in a bankruptcy.
6. The employee payroll taxes payable relate to Canada Pension Plan, Employee Insurance and Income tax withheld at source from employees' pay over the last three months.

Required:

Complete the Statement of Affairs for Trouble inc. at January 31, 2020 in order to help Home Design Corporation make a decision.