Kimber Co. is in the process of liquidating and going out of business. The firm\
ID: 2492397 • Letter: K
Question
Kimber Co. is in the process of liquidating and going out of business. The firm's accountant has prove the following balance sheet and additional information. It is estimated that all but 18 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 are equipment can be sold at $40, 000 above book value (the difference between original cost and depreciation shown on the balance sheet), and the land can be sold at its current appraisal value of $64,000. In addition to the liabilities included in the balance sheet, $2,460 is owed to employees for work since the last pay period, and interest of $5,060 has accrued on notes payable and long term Calculate the amount of cash that will be available to the stockholders if the accounts receivable collected, the other assets are sold as described, and all liabilities and other claims are pad in fullExplanation / Answer
Cash Recd. On Sale or Collection of Assets Accounts Receivables - 63000 X 82% 51,660 Merchandise Inventory - 113000 X 90% 101,700 Building & Equipment - (347000 - 192500) + 40000 194,500 Land 64,000 Total Cash recd. On sale or Collection of Assets 411,860 Calculation of Cash Available to Stockholders Cash in Hand 19,000 Cash recd. On sale or Collection of Assets 411,860 Total Cash Available 430,860 Less: Cash Paid to Accounts Payable 46,900 Notes Payable 55,300 Wages Payable 2,460 Interest on Notes Payable & Long term debt 5,060 Long Term Debts 54,500 164,220 Cash Availble for Stockholders 266,640
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