Prepare consolidated balance sheet. Submit with your solution your working papers.
Criticize briefly (not to exceed 500 words) the condition of each company and state whether, in your opinion, the investments in allied companies are valued correctly.
XXIII
Jones & Robinson, merchants, are unable to meet their obligations. From their books and the testimony of the insolvent debtors, the following statement of their condition is ascertained:
| Cash on Hand | $ 5,500.00 |
| Debtors ($1,000 good; $600 doubtful but | |
| estimated to produce $200, $1,000 bad) | 2,600.00 |
| Property (estimated to produce $9,000) | 14,000.00 |
| Notes Receivable, Good | 4,250.00 |
| Other Securities ($3,000 pledged with | |
| partially secured creditors; the | |
| remainder held by the fully | |
| secured creditors) | 28,000.00 |
| Jones, Drawings | 9,000.00 |
| Jones, Capital | 10,000.00 |
| Robinson, Drawings | 8,400.00 |
| Robinson, Capital | 16,050.00 |
| Sundry Losses | 13,500.00 |
| Preferential Claims—Wages, Salaries, and Taxes | 700.00 |
| Trade Expenses | 7,400.00 |
| Creditors Unsecured | 25,000.00 |
| Creditors Partially Secured | 23,900.00 |
| Creditors Fully Secured | 17,000.00 |
Prepare a statement of affairs and deficiency account.
XXIV
Parker & Riley, being unable to meet their obligations, have made an assignment. You are asked to prepare a statement of affairs for presentation at a meeting of their creditors. Some of the creditors are entirely or partially secured, the security being a part of the assets. The following is a trial balance of their ledger at the date of the assignment:
| Cash | $ 1,200.00 | |
| Stock and Material (old inventory) | 12,000.00 | |
| Reliance Trust Co. Stock (20 shares at cost) | 2,200.00 | |
| Accounts Receivable | 10,550.00 | |
| Notes Receivable | 2,000.00 | |
| Mortgage Receivable (second mortgage) | 1,000.00 | |
| Real Estate (store building and lot) | 14,000.00 | |
| Fixtures | 1,700.00 | |
| Horses, Trucks, and Harness (asset account) | 1,400.00 | |
| Accounts Payable | $ 28,000.00 | |
| Loans Payable | 7,000.00 | |
| Mortgage on Real Estate | 5,000.00 | |
| Purchases | 30,000.00 | |
| Sales | 36,000.00 | |
| Rents | 1,200.00 | |
| Salaries | 3,500.00 | |
| Interest and Discount | 960.00 | |
| Taxes Accrued | 740.00 | |
| Insurance Unexpired | 500.00 | |
| General Expenses | 4,130.00 | |
| Parker, Capital | 8,000.00 | |
| Riley, Capital | 4,000.00 | |
| Parker, Drawings | 3,000.00 | |
| Riley, Drawings | 1,800.00 | |
| $89,940.00 | $89,940.00 |
The accounts receivable are classed as: good $8,000; doubtful $1,500 (estimated to produce $1,000); worthless, $1,050. Notes receivable will realize $1,800; the second mortgage is estimated to produce $800; the trust company shares $1,800; delivery equipment $900; fixtures $1,000; and real estate $12,500.