1) Mount Inc. was a hardware store that operated in Boise, Idaho. Management mad
ID: 2500915 • Letter: 1
Question
1) Mount Inc. was a hardware store that operated in Boise, Idaho. Management made some poor inventory acquisitions that loaded the store with unsalable merchandise. Due to the decline in revenues, the company became insolvent. Following is a trial balance as of March 15, 2011, the day the company filed for Chapter 7 liquidation.
Assume that the company was being liquidated and that the following transactions occurred:
Accounts receivable of $23,400 were collected.
All of the company's inventory was sold for $52,000.
Additional accounts payable of $13,000 incurred for various expenses such as utilities and maintenance were discovered.
The land and building were sold for $92,300.
The note payable due to the Idaho Savings and Loan was paid.
The equipment was sold at auction for only $14,300 with the proceeds applied to the note owed to the Second National Bank.
The investments were sold for $27,300.
Administrative expenses totaled $26,000 as of July 26, 2011, but no payment had yet been made.
Required:
Prepare a statement of realization and liquidation for the period from March 15 through July 26, 2011.
Explanation / Answer
Answer:
Statement of realization and liquidation for the period from March 15 through July 26, 2011
Amount $ Amount $ Assets to be realized Liabilities to be realized Accounts receivable 32,500 Accounts payable 42,900 Building 39,000 Note payable- Idhao 91,000 Equipment 18,200 Note payable 195,000 Cash 1,300 Payroll taxes payable 1,300 Inventory 130,000 Salaries payable 6,500 Investment 19,500 Advertising payable 5,200 Land 13,000 Liabilities paid/payable Assets realized Payroll taxes payable 1,300 Cash 1,300 Salaries payable 6,500 Inventory 52,000 Advertising payable 5,200 Accounts receivable 23,400 Accounts payable 55,900 Land and Building 92,300 Note payable- Idaho 91,000 Equipment 14,300 Note payable- Second National Bank 14,300 Investment 27,300 Administrative Expenses 26,000 Net Income(balancing figure) 98,800 Total 552,500 Total 552,500Related Questions
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