ssets Cash 100,000 Accounts receivable 600,000 Inventory 900,000 Equipment, net 400,000 total 2,000,000 Liab and Equity Accounts payable 1,600,000 Loan payable 1,500,000 Share Capital 2,000,000 Retained Earnings (deficit) (3,10
Rainy Co financial position before its liquidation is as follows:
Assets
Cash 100,000
Accounts receivable 600,000
Inventory 900,000
Equipment, net 400,000
total 2,000,000
Liab and Equity
Accounts payable 1,600,000
Loan payable 1,500,000
Share Capital 2,000,000
Retained Earnings (deficit) (3,100,000)
total 2,000,000
Transactions in the first quarter of liquidation are as follows:
-90% of the accounts receivable were collected. Commission of third party collectors amounted to 108,000. The collectors expect to collect the remaining receivables in the next quarter.
-Half of the inventory was sold at 80% of carrying amount. The other half is expected to be sold at 60% of carrying amount.
-the equipment was sold for 380,000 after it was refurbished for 50,000
-100,000 accounts payable were paid
-employee termination benefits of 100,000 were recorded and 80,000 of that amount were paid
-the lender accepted 1,000,000 as full payment of the loan
-the liquidation costs of 50,000 were paid
-scrap materials from clearing the warehouse were sold for 10,000.
PLEASE ANSWER BOTH QUESTIONS AND PROVIDE COMPLETE SOLUTIONS. THANK YOU. THE QUESTIONS ARE IN THE PHOTO ATTACHED.
Step by step
Solved in 2 steps with 2 images
