Mandich Co. had the following amounts for its assets, liabilities, and stockholders' equity accounts just before filing
Question:
Mandich Co. had the following amounts for its assets, liabilities, and stockholders' equity accounts just before filing a bankruptcy petition and requesting liquidation:
| | | | Net |
| | Book | | Realizable |
| | Value | | Value |
Cash | $ | 10,000 | $ | 10,000 |
Accounts receivable | | 100,000 | | 60,000 |
Inventory | | 350,000 | | 350,000 |
Land | | 110,000 | | 75,000 |
Building and equipment | | 700,000 | | 300,000 |
Accounts payable | | 100,000 | | |
Salaries payable | | 70,000 | | |
Notes payable (secured by inventory ) | | 300,000 | | |
Employees’ claims for contributions to person plan | | 10,000 | | |
Taxes payable | | 80,000 | | |
Liability for accured expenses | | 25,000 | | |
Bonds payable | | 500,000 | | |
Common stock | | 200,000 | | |
Additional paid-in capital | | 100,000 | | |
Retained earnings (deficit) | | (115,000) | | |
Of the salaries payable, $30,000 was owed to an officer of the company. The remaining amount was owed to salaried employees who had not been paid within the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed $15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed $2,500. The maximum owed for any one employee's claims for contributions to benefit plans was $800. Estimated expense for administering the liquidation amounted to $40,000.
On a statement of financial affairs , what amount would have been shown as assets available to pay liabilities with priority and unsecured creditors?
a. $390,000.
b. $445,000.
c. $660,000.
d. $795,000.
e. $495,000.
Ethics in Accounting A Decision Making Approach
ISBN: 978-1118928332
1st edition
Authors: Gordon Klein