On February 1, 2021, Toymania Company begins liquidation activities and adopts the liquidation basis of accounting. The book value of its assets totaled $700,000, and the book value of its liabilities totaled $600,000. Toymania's cash balance was $12,000. Expected proceeds from reported assets other than cash were: Inventory, $100,000; and plant and equipment, $480,000. Expected costs of liquidating assets were $15,000.
During the four months ending May 31, 2021, the company sold inventory for $70,000, sold equipment for $200,000, and paid liquidation costs of $8,000. Reported liabilities of $268,000 were paid. Toymania owes $50,000 to a creditor who agreed to accept $44,000 as full payment, but payment has not yet been made. At May 31, 2021, estimated valuations on remaining assets other than cash are as follows:
•Inventory, $28,000
•Plant and equipment, $275,000
Newly identified previously unreported intangible assets can be liquidated for an estimated $10,000. Expected remaining costs of liquidating assets are $5,000.
Required
a. Prepare a statement of changes in neat assets in liquidation for the four months ending May 31, 2021.
b. Prepare a statement of net assets in liquidation as of May 31, 2021.

Question

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The Answer of On February 1, 2021, Toymania Company begins liquidation activities and adopts the liquidation basis of accounting. The book value of its assets totaled $700,000, and the book value of its liabilities totaled $600,000. Toymania's cash balance was $12,000. Expected proceeds from reported assets other than cash were: Inventory, $100,000; and plant and equipment, $480,000. Expected costs of liquidating assets were $15,000.
During the four months ending May 31, 2021, the company sold inventory for $70,000, sold equipment for $200,000, and paid liquidation costs of $8,000. Reported liabilities of $268,000 were paid. Toymania owes $50,000 to a creditor who agreed to accept $44,000 as full payment, but payment has not yet been made. At May 31, 2021, estimated valuations on remaining assets other than cash are as follows:
•Inventory, $28,000
•Plant and equipment, $275,000
Newly identified previously unreported intangible assets can be liquidated for an estimated $10,000. Expected remaining costs of liquidating assets are $5,000.
Required
a. Prepare a statement of changes in neat assets in liquidation for the four months ending May 31, 2021.
b. Prepare a statement of net assets in liquidation as of May 31, 2021.

On February 1, 2021, Toymania Company Begins Liquidation Activities and Adopts