Hampton Company is trying to decide whether to seek liquidation or reorganization. Hampton has provided the following balance sheet:
Additional information is as follows:
-The investments are currently worth $13,000.
-It is estimated that $32,000 of the accounts receivable are collectible.
-The inventory can be sold for $74,000.
-The prepaid expenses and the intangible assets have no net realizable value.
-The land and building are currently valued at $250,000.
-The equipment can be sold for $60,000.
-Administrative expenses (not yet recorded) are estimated to be $12,500.
-Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and $3,000 each to two other employees).
-Accrued expenses include $7,000 of unpaid payroll taxes.
-Prepare a schedule to show the amount of total assets available to pay liabilities with priority and unsecured creditors.

Question

Hampton Company is trying to decide whether to seek liquidation or reorganization. Hampton has provided the following balance sheet:
  Additional information is as follows:
-The investments are currently worth $13,000.
-It is estimated that $32,000 of the accounts receivable are collectible.
-The inventory can be sold for $74,000.
-The prepaid expenses and the intangible assets have no net realizable value.
-The land and building are currently valued at $250,000.
-The equipment can be sold for $60,000.
-Administrative expenses (not yet recorded) are estimated to be $12,500.
-Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and $3,000 each to two other employees).
-Accrued expenses include $7,000 of unpaid payroll taxes.
-Prepare a schedule to show the amount of total assets available to pay liabilities with priority and unsecured creditors.

Quizplus · Accepted Answer

The Answer of Hampton Company is trying to decide whether to seek liquidation or reorganization. Hampton has provided the following balance sheet:
  Additional information is as follows:
-The investments are currently worth $13,000.
-It is estimated that $32,000 of the accounts receivable are collectible.
-The inventory can be sold for $74,000.
-The prepaid expenses and the intangible assets have no net realizable value.
-The land and building are currently valued at $250,000.
-The equipment can be sold for $60,000.
-Administrative expenses (not yet recorded) are estimated to be $12,500.
-Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and $3,000 each to two other employees).
-Accrued expenses include $7,000 of unpaid payroll taxes.
-Prepare a schedule to show the amount of total assets available to pay liabilities with priority and unsecured creditors.

Hampton Company Is Trying to Decide Whether to Seek Liquidation