The following balance sheet has been prepared by the accountant for Limestone Company as of June...

The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2017, the date on which the company is to file a voluntary petition of bankruptcy:

LIMESTONE COMPANY Balance Sheet June 3, 2017
Assets
Cash	$	12,000
Accounts receivable (net)		74,000
Inventory		106,000
Land		109,000
Buildings (net)		309,000
Equipment (net)		198,000
Total assets	$	808,000
Liabilities and Equities
Accounts payable	$	116,000
Notes payable—current (secured by equipment)		268,000
Notes payable—long term (secured by land and buildings)		199,000
Common stock		129,000
Retained earnings		96,000
Total liabilities and equities	$	808,000

Additional Information

If the company is liquidated, administrative expenses are estimated at $27,000.
The accounts payable figure includes $19,000 in wages earned by the company's 12 employees during May. No one earned more than $3,100.
Liabilities do not include taxes of $23,000 owed to the U.S. government.
Company officials estimate that 35 percent of the accounts receivable will be collected in a liquidation and that the inventory disposal will bring $89,000. The land and buildings will be sold together for approximately $328,000; the equipment should bring $139,000 at auction.
Prepare a statement of financial affairs for Limestone Company as of June 3, 2017.

Solutions

Expert Solution

LIMESTONE COMPANY
Statement of Finacial Affairs
3-Jun-17
Book Value	Assets		Available for Unsecured Creditors

	Pledged with Fully Secured Creditors:
418,000.00	Land & Buildings	328,000.00
	Less: Notes Payable Long term	(199,000.00)	129,000.00

	Pledged with Partially Secured Creditors:
198,000.00	Equipment	139,000.00
	Less: Notes Payable - Current	(268,000.00)	-

	Free Assets:
12,000.00	Cash		12,000.00
74,000.00	Accounts Receivables		25,900.00
106,000.00	Inventory		89,000.00
	Total amount available to pay liabilities with priority and unsecured creditors		255,900.00
	Less: Liabilities with priority (listed below)		(69,000.00)
	Available for Unsecured Creditors		186,900.00
	Estimated Deficiency		39,100
808,000.00			226,000.00


Book Value	Liabilities and Stockholders' Equity		Unsecured - Nonpriority Liabilities
	Liabilities with Priority:
	Administrative Expenses	27,000.00
19,000.00	Salaries Payable	19,000.00
	Taxes Payable	23,000.00
	Total	69,000.00

	Fully Secured Creditors:
199,000.00	Notes Payable - Long Term	199,000.00
	Less: Land & Buildings	(328,000.00)	-

	Partially Secured Creditors:
268,000.00	Notes Payable Current	268,000.00
	Less: Equipment	(139,000.00)	129,000.00

	Unsecured Creditors:
97,000.00	Accounts Payable (Other than Salaries)		97,000.00
225,000.00	Stockholders' Equity		-

808,000.00			226,000.00

IF ANY DOUBT PLEASE MENTION IN COMMENT

ekkarill92 answered 1 year ago

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