A creditor’s committee of Carlton Company has obtained the March 31, 2015, balance sheet shown below.
An analysis of the company’s accounts disclosedthe following activities through April 30, 2015:
a. Carlton Company started business on April 1, 2010, with authorized stock of $100 par. Of the 1,000 authorized shares, 750 were paid for in full at par, and 250 were subscribed at par, with a required 20% down payment and the balance payable upon call. All the subscriptions receivable are due from W. Krueger, president of the company, and are fully collectible.
b. Marketable securities include the $25,000 cost of U.S. Treasury bonds valued at $23,200 and 25 shares of Groves Company common stock, costing $3,750, with a fair value of $3,300.
c. The land originally cost $10,000, and the building was erected at a cost of $102,500. Of the accumulated depreciation, $30,000 is applicable to the building. The realizable value of the real estate is $75,000.
d. Notes receivable were endorsed with recourse when discounted and are expected to be dishonored. Of the accounts receivable, $3,000 are considered collectible.
e. Inventories are shown at cost. Any finished goods are expected to yield 110% of cost. If scrapped, goods in process have a realizable value of only $2,200. It is estimated, however, that the work in process can be completed by the addition of $3,000 of present materials and an expenditure of $3,500 for labor. The materials deteriorate rapidly and will realize only 20% of cost.
f. Equipment is estimated to have a realizable value of $12,000.
g. Notes payable include a $25,000 note to Aerotex Company and a $62,500 note to B. Williams. Aerotex holds the U.S. Treasury bonds as security for its loans. It also holds the first mortgage of $37,500 on the company’s real estate, interest on which is paid through March 31, 2015. The note payable to Williams is secured by a chattel mortgage on factory equipment. Interest on the note has been paid through March 31, 2015. Williams also holds the second mortgage on the real estate.
h. Any expenses not specifically mentioned need not be considered. All salaries qualify for priority, including labor to complete the work in process.
Prepare a statement of affairs for Carlton Company.

  • CreatedApril 13, 2015
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