2.99 See Answer

Question: Use the trial balance presented for Lynch,

Use the trial balance presented for Lynch, Inc., in problem (51). Assume that the company will be liquidated and the following transactions will occur:
∙ Accounts receivable of $18,000 are collected with remainder written off.
∙ All of the company’s inventory is sold for $40,000.
∙ Additional accounts payable of $10,000 incurred for various expenses, such as utilities and maintenance, are discovered.
∙ The land and building are sold for $71,000.
∙ The note payable due to the Colorado Savings and Loan is paid.
∙ The equipment is sold at auction for only $11,000 with the proceeds applied to the note owed to the First National Bank.
∙ The investments are sold for $21,000.
∙ Administrative expenses total $20,000 as of July 23, 2020, but no payment has been made yet.
a. Prepare a statement of realization and liquidation for the period from March 14, 2020, through July 23, 2020.
b. How much cash would be paid to an unsecured, nonpriority creditor that Lynch, Inc., owes a total of $1,000?


See Answer