Question

Statement of Realization and Liquidation

At January 1, 2020, the records of Sharon Thomson, trustee in bankruptcy for Davis Corporation, showed the following:

	Dr (Cr)
Cash	20,000
Assets not realized:
Land	60,000
Building	250,000
Equipment	75,000
Patents	15,000
Liabilities not liquidated:
Accounts payable	(279,000)
Loans payable	(341,000)
Estate deficit	200,000

During January, Thomson sold equipment having a book value of 35,000 for 10,000, and sold the patents for 30,000. Thomson was paid 5,000 as a trustee's fee, and 50,000 was distributed proportionately to the creditors.

Required:

Prepare a statement of realization and liquidation for January and a balance sheet and statement of estate deficit as of January 30, 2020.

Answer 1

Statement of Relization and Liquidtion
Prticulars	Amount ($)	Prticulars	Amount ($)
To Opening Cash	20000	By Trustee Fee	5000
Equipment	10,000	By Pref. Creditors	50000
Patents	30,000
		By Cash	5000
Total	60000	Total	60000

Statement of Estate Deficit
As on 31st Jan 2020
To Opening Cash	20000	By Trustee Fee	5000
To assets not specifically pledged		By Pref. Creditors	50000
Land	60,000	Loans Payable	341000
Building	250,000
Equipment	40,000
Equipment	10,000
Patents	30,000
		By Surplus	14000
Total	410000	Total	410000

Balance Sheet
At Jan 31, 2020
Particulars		Amount ($)
Shareholder's Fund
Authorised Share Capital	-
Issued and Paid up Share Capital		-
Available for Eq Share Holders		14,000
Long Term Liabilities (More than 12 months)		-
Current Liabilities (Less than 12 months)
Loans Payable		341,000
Total		355,000
Assets
Fixed Assets
Land		60,000
Building		250,000
Equipment		40,000
Patents		-
Current Assets
Cash		5,000
Total		355,000