Kimber Co. is in the process of liquidating and going out of business. The firm?s accountant has provided the following balance sheet and additional information:

It is estimated that all but 20 percent of the accounts receivable can be collected, and that the merchandise inventory can be disposed of in a liquidation sale for 70 percent of its cost. Buildings and equipment can be sold at $60,000 above book value (the difference between original cost and accumulated depreciation shown on the balance sheet), and the land can be sold at its current appraisal value of $85,000. In addition to the liabilities included in the balance sheet, $5,000 is owed to employees for their work since the last pay period, and interest of $10,000 has accrued on notes payable and long-term debt.

Required:

a. Calculate the amount of cash that will be available to the stockholders if the accounts receivable are collected, the other assets are sold as described, and all liabilities and other claims are paid in full.

b. Briefly explain why the amount of cash available to stockholders (computed in part a) is different from the amount of total stockholders? equity shown in the balance sheet.

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Assets $ 30,000 Cash .... Accounts receivable 90,000 Merchandise inventory 150,000 Total current assets $270,000 $ 50,000 Land 400,000 Buildings and equipment Less: Accumulated depreciation Total land, buildings, and equipment (120,000) 330,000 $600,000 Total assets Liabilities and Stockholders' Equity $ 80,000 Accounts payable Notes payable ... 110,000 $190,000 Total current liabilities Long-term debt .. 130,000 $320,000 Total liabilities Stockholders' Equity: Common stock, no par $ 100,000 Retained earnings Total stockholders' equity 180,000 280,000 $600,000 Total liabilities and stockholders' equity