Ask Accounting Basics Expert

Statement of Affairs and Deficiency Account
A receiver was appointed by the courts to manage the affairs of Davis Manufacturing Company on March 31, 2009. On this date, the following balance sheet applied;
Davis Manufacturing Company Balance Sheet
March 31, 2009
Cash 22,000
Accounts Payable 115,500
Notes Receivable 60,000
Accrued Interest on Notes Receivable 1,375


Inventories
Finished Goods 140,000
Work in Process 97,500
Raw Materials 60,000
Supplies 7,750
Prepaid Expenses 3,000
Investment in Stock 66,250
Land 105,000
Buildings (net) 495,000
Equipment (net) 232,500
Total 1,406,375
Notes Payable 196,000
Accounts Payable 587,500
Wages Payable (all with priority) 33,750
Payroll Taxes Payable (all with priority) 5,250
Accrued Interest Payable
On Notes Payable 2,750
On Mortgage Note Payable 21,250
Mortgage Note Payable 440,000
Common Stock 469,000
Retain Earnings (Deficit) (349,125)
Total 1,406.375

Additional Information:
1. The cash account includes a 500 travel advance that has been spent.
2. Of the accounts receivables, 75,000 is believed to be collectible. The remaining accounts are doubtful, but it is believed that about one-third of these will be realized eventually. The accounts receivable are pledged as security on a 10,000 note payable.
3. Notes receivables of 50,000 have been pledges as security on a note payable of 45,000.
This portion of the notes receivable has an estimated realizable value of 35,000. The remaining notes receivable, including the accrued interest, are expected to be fully collected. The 45,000 note payable has accrued interest due of 1,000.
4. The finished-goods inventory is expected to sell at 20% above its cost, with expenses involved in its disposition approximating 10% of selling price. The work in process inventory can be completed at an additional cost of 55,000, of which 40,000 represents
materials used from the present raw materials inventory. The completed work in process should then sell for 145,000; the remaining raw material should sell for one-half their cost. Supplies are expected to realize 1,300.
5. The investment in stock consists of 2,000 shares of Monelli Vineyards. The stock has a current market value of 50 per share and is pledged as security on a note payable of 41,000. Interest accrued on the note payable amounts to 1,750.
6. The land and buildings have been appraised at 165,000 and 260,000, respectively. They are pledged as collateral on the mortgage note payable.
7. The equipment is expected to realize 100,000.
8. Prepaid expenses are nonrealizable.

Required:
A. Prepare a statement of affairs
B. Prepare a deficiency account detailing estimated gains and losses
C. find out the dividend rate per dollar of unsecured liability

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M955541

Have any Question?


Related Questions in Accounting Basics

Question what discoveries have you made in your research

Question: What discoveries have you made in your research and how does this information inform your ability to evaluate effective coaching and its impact on organizations? Consider these guiding questions: 1. What core c ...

Question requirement 1 read the article in below attachment

Question: Requirement: 1. Read the article in below attachment, and answer the questions in a paper format. Read below requirements before your writing! 2. Not to list the answers, and you should write as a paper format. ...

Question as a financial consultant you have contracted with

Question: As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term investment opportunities. You have agreed to provide a detailed report ill ...

Question the following information is taken from the

Question: The following information is taken from the accrual accounting records of Kroger Sales Company: 1. During January, Kroger paid $9,150 for supplies to be used in sales to customers during the next 2 months (Febr ...

Assignment 1 lasa 2-capital budgeting techniquesas a

Assignment 1: LASA # 2-Capital Budgeting Techniques As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term investment opportunities. You ha ...

Assignment 2 discussion questionthe finance department of a

Assignment 2: Discussion Question The finance department of a large corporation has evaluated a possible capital project using the NPV method, the Payback Method, and the IRR method. The analysts are puzzled, since the N ...

Question in this case you have been provided financial

Question: In this case, you have been provided financial information about the company in order to create a cash budget. Management is seeking advice or clarification on three main assumptions the company has been operat ...

Question 1what step in the accounting cycle do adjusting

Question: 1. What step in the accounting cycle do Adjusting Entries show up 2. How do these relate to the Accounting Worksheet? 3. Why are they completed at the end of each accounting period? The response must be typed, ...

Question is it important for non-accountants to understand

Question: Is it important for non-accountants to understand how to read financial statements? If you are not part of the accounting/finance function in a business what difference would it make? The response must be typed ...

Question refer to the hat rack cash flow statement 2002 in

Question: Refer to the Hat Rack Cash Flow Statement, 2002 in the text on page 17. Answer the following questions and submit to me via Canvas by the due date. 1. Cash flow from operations? 2. Cash flow from investing? 3. ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As