Problem 3 The Modesto Company is facing possible liquidation. Using the following information, prepare a statement of financial affairs in good form. Here's the company's most recent balance sheet Assets Cash Accounts Receivable Inventory Investments Equipment Land $12,000 60,000 120,000 45,000 105,000 82,000 Liabilities and equities Accounts payable $170,000 Notes payable 90,000 Mortgage payable 80,000 Common stock Retained earnings 9,000 Total Liab, and Eq's $424,000 75,000 Total assets $424,000 The mortgage payable is fully secured by the land. The land can be sold immediately for $102,000 The equipment partially secures the notes payable. The equipment is not in good shape and at auction will bring only $10,000 The market has declined so the investments have lost 40% of their value. It is estimated that 30% of the accounts receivable will have to be written off. The inventory is outdated and will bring only 50% of its book value at auction Additional income taxes will be $35,000 Administrative expenses for bankruptcy are expected to total $20,000