Problem 1: Answer questions related to a liquidation and realization statement with the following information of Johnson Inc.:

Balance Sheet as on Dec 31, 2016:

Assets

Cash. $9,000

Accounts receivable (30,000 - 7,500) 22,500

Inventory 285,300

Property & Equipment (181,200 - 73,650) 107,550

Owners Equity

Capital Stock 270,000

Retained earnings (deficit). (132,000)

Note: Assume that there are no liabilities in this problem.

The trustee who is appointed for liquidation, provided the following additional information:

1. The trustee sold all of Johnsons inventory for $306,000 of which $150,000 represented credit sales.
2. Cash collected on old receivables: $ 22,500, and on new receivables: $64,500.
3. Trustee expenses paid during liquidation: $ 29,700
4. The trustee recorded depreciation expense of $5,250.
5. Estimated uncollectibles on new receivables are $4,500, the trustee wrote off all the remaining accounts receivables.
6. The trustee sold off all the property and equipment for $87,000.

1. (Problem 1 related) The gain or loss on the sale of property and equipment will amount to:

1. $20550
2. $15,300
3. $94,200
4. $87,000