Question

Prost Company has filed a bankruptcy petition. Its account balances at December 31, 2012, are presented here:
Cash................... $ 2,500
Notes Receivable................ 60,000
Accounts Receivable (net)........... 76,000
Inventories Finished Goods............ 43,000
Work in Process............ 60,000
Raw Materials 51,000 Prepaid Expenses...... 4,000
Investment in Stock............ 12,000
Land .................... 140,000
Property and Equipment (net) ........... 400,000
Goodwill.................. 10,000
Total ................... $858,500
Accounts Payable.............. $220,000
Accrued Wages (all with priority) ........ 45,000
Bank Notes Payable............ 225,000
Mortgage Payable.............. 350,000
Common Stock............... 380,000
Retained Earnings (deficit) ............ (361,500)
Total.................... $858,500
The following additional information is available:
1. All notes receivable with the exception of one for $2,500 are expected to be collected.
The notes receivable are pledged as security on the bank notes payable.
2. Of the total accounts receivable, $55,000 is expected to be collected. The accounts receivable are also pledged as security on the bank notes payable.
3. Finished goods can be sold at 30% above cost. Selling expenses will be approximately 15% of selling price. Work in process is to be completed at an additional cost of $30,000, of which $19,000 represents the cost of raw materials. The expected selling price of the work in process (after completion) is 10% above cost, with selling expenses of 15% of selling price. Unused raw materials can be sold for $18,000.
4. Prepaid expenses are fully recoverable.
5. The investment in stock consists of 100 shares of MBI Company with a current market value of $19,000.
6. Land is appraised at $200,000, and plant and equipment is appraised at $205,000. The land and plant and equipment serve as collateral on the mortgage payable. Accrued but unrecorded interest on the mortgage payable amounts to $3,000.

Required
A. Prepare a statement of affairs, including a deficiency account.
B. Compute the estimated dividend to be paid general unsecured creditors.



$1.99
Sales6
Views118
Comments0
  • CreatedMarch 13, 2015
  • Files Included
Post your question
5000