Question: Plum Company has been in receivership for the past five

Plum Company has been in receivership for the past five months. At the beginning of this period, the following trial balance was taken from Plum Company's books.
Cash.................. $ 4,500
Accounts Receivable........... 15,000
Inventory ............... 142,650
Property and Equipment ....... 90,600
...................... $252,750
Allowance for Uncollectibles........ $ 3,750
Accumulated Depreciation........... 36,825
Accounts Payable........... 143,175
Capital Stock .............. 135,000
Retained Earnings (deficit) ....... (66,000)
...................... $252,750
The trustee, P. Smith, who was appointed to manage the debtor's business during the period of liquidation, opened a new set of books and took title to Plum Company's assets on June 1, 2012. The activities of the trustee during the five-month period ended October 31, 2012, are as follows:
1. The trustee sold all Plum Company's inventory for $153,000, of which $75,000 represented credit sales.
2. Cash was collected on old receivables, $11,250, and on new receivables, $64,500.
3. Expenses paid during the period were
Operating expenses.... $11,850
Trustee expenses.... 3,000
4. The trustee recorded depreciation expense of $5,250.
5. The trustee paid off all the accounts payable.
6. Estimated uncollectibles on the new accounts receivable were $2,250; the trustee wrote off all the remaining old accounts receivable.
7. The trustee sold all the property and equipment for $43,500.

Required:
A. Prepare journal entries to record the effects of these transactions on the books of both the trustee and Plum Company.
B. Prepare a combining workpaper at the end of the five-month period, October 31, 2012.


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  • CreatedMarch 13, 2015
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