Realization and Liquidation Account
A balance sheet for Bran Company on June 30, 2012, the date Jim Brown was appointed trustee, is presented here:
Bran Company Balance Sheet
June 30, 2012
|
Cash |
$ 15,000 |
|
|
Accounts Receivable |
$ 45,000 |
|
|
Less: Allowance for Uncollectibles |
6,000 |
39,000 |
|
Inventory |
104,000 |
|
|
Plant and Equipment |
215,000 |
|
|
Less: Accumulated Depreciation |
70,000 |
145,000 |
|
Total Assets |
$303,000 |
|
|
Accounts Payable |
$145,000 |
|
|
Common Stock |
225,000 |
|
|
Retained Earnings (deficit) |
(67,000) |
|
|
Total Liabilities and Equities |
$303,000 |
The following information concerning the period from June 30, 2012, to December 31, 2012, is also available:
- All Bran Company”s assets were transferred to the trustee.
- Sales for the period were $130,000, of which $30,000 were cash sales.
- Receivables collected by the trustee in cash were:
- Merchandise inventory was purchased on account by the trustee in the amount of $35,000.
- Cash payments were made by the trustee for:
(a) Accounts payable (old), $110,000
(b) Accounts payable (new), $30,000
(c) Operating expenses, $47,000
(d) Trustee expense, $2,000
- Adjusting entries recorded by the trustee on December 31, 2009, were:
(a) Estimated uncollectibles
(b) Accounts receivable written off (old), $7,000
(c) Depreciation expense, $10,000
- The merchandise inventory balance on December 31 was $75,000.
- The plant and equipment included a parcel of land and a piece of equipment, both of which were sold by the trustee for cash. The land cost $14,000 and was sold for $25,000. The equipment, which had a book value of $25,000 (cost, $50,000; accumulated depreciation, $25,000), was sold for $13,000.