Problem
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:
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Assets
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Cash
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16,500
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Accounts receivable
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64,000
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Merchandise inventory
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110,000
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Total current assets
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190,500
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Land
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47,000
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Buildings & equipment
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347,500
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Less: Accumulated depreciation
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190,500
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Total land, buildings, & equipment
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204,000
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Total assets
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394,500
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Liabilities and Stockholders' Equity
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Accounts payable
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45,100
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Notes payable
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56,000
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Total current liabilities
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101,100
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Long-term debt
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50,500
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Total liabilities
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151,600
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Stockholders' Equity
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Common stock, no par
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110,000
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Retained earnings
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132,900
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Total stockholders' equity
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242,900
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Total liabilities and stockholders' equity
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394,500
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It is estimated that all but 8 percent of the accounts receivable can be collected, and that the merchandise inventory can be disposed of in a liquidation sale for 90 percent of its cost. Buildings and equipment can be sold at $40,000 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 $61,000. In addition to the liabilities included in the balance sheet, $2,380 is owed to employees for their work since the last pay period, and interest of $5,235 has accrued on notes payable and long-term debt.
A) Calculate the amount of cash that will be available to the stockholders if the accounts receivable are collected, the other assets are sold as described, and all liabilities and other claims are paid in full.
This is what I have so far, which is all correct. I just need to find the total cash available (including sale of assets).
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Total cash available (including sale of assets)
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Notes payable
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56,000
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Long-term debt
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(50,500)
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Wages payable
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2,380
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Interest payable
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5,235
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Accounts payable
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45,100
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| |
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58,215
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Total cash available to stockholders
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$(58,215)
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