Transcribed Image Text: The Modesto Company is facing possible liquidation

Transcribed Image Text: 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
Liabilities and equities
Accounts payable
Notes payable
Assets
Cash
$12,000
$170,000
Accounts Receivable
60,000
120,000
90,000
Inventory
Mortgage payable
80,000
Investments
45,000
Equipment
75,000
9,000
105,000
Common stock
Land
82,000
Retained eamings
Total assets
$424,000
Total Liab. and Eq’s
$424,000
The mortgage payable is fully secured by the land. The land can be sold
$104,000
immediately for
The equipment partially secures the notes payable. The equipment is not in
good shape and at auction will bring only
$12,000
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The inventory is outdated and will bring only 50% of its book value at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
$15,000
Administrative expenses for bankruptcy are expected to total $20,000.

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