Question: Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise.
Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The entire inventory can be sold for only $33,000. Following is a trial balance as of March 14, 2013, the day the company files for a Chapter 7 liquidation:.png)
Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $75,000, and the equipment is worth $19,000. The investments represent shares of a nationally traded company that can be sold at the current time for $21,000. Administrative expenses necessary to carry out a liquidation would approximate $16,000.
Prepare a statement of financial affairs for Lynch, Inc., as of March 14, 2013?
Debit Credit 33,000 25,000 50,000 16,000 8,000 4,000 Advertising payable 80,000 1,000 Cash Common stock Equipment . Inventory - . 50,000 30,000 100,000 15,000 10,000 Land Note Payable-Colorado Savings and Loan (secured by lien on land and building). . Note Payable- First National Bank (secured by equipment). . Payroll taxes payable 70,000 150,000 1,000 126,000 Salaries payable (owed equally to two employees) . .. . . . . . 387,000 $381700 5,000 $387,000 . .
