Of the accounts payable $20,000 is unsecured and $8,000 is secured by the second mortgage and trust company stock. The loans payable are secured by the equity in the real estate. The inventory of merchandise on hand which foots $5,000 is expected to realize $3,000. Other liabilities not booked are employees’ wages $550, and interest on mortgage $125. The unexpired insurance is expected to yield $150 upon redemption.
Draw up a statement of affairs and deficiency account.
XXV
The Metropolitan Book Co., a corporation, goes into voluntary liquidation and a trustee is appointed. The following is the trial balance of the company on July 1, 1918, the date when its affairs are turned over to the trustee.
| Capital Stock | $ 20,000.00 | |
| Cash | $ 553.69 | |
| Office Furniture | 1,666.92 | |
| Meter Deposit | 60.00 | |
| Accounts Receivable | 26,153.95 | |
| Rogers & Co. | ||
| (moneys collected for their account) | 14,738.00 | |
| Notes Payable | 27,573.50 | |
| Accounts Payable | 4,197.22 | |
| Purchases | 27,404.74 | |
| Sales | 8,045.35 | |
| Expense | 10,751.97 | |
| Surplus | 7,962.80 | |
| $74,554.07 | $74,554.07 |
Value of merchandise on hand is $20,183.86, and the other assets are appraised at book value. The trustee’s cash receipts and disbursements are:
| Dr.Cash Cr. | |||
| Balance taken over | $ 553.69 | Notes Paid | $ 27,573.50 |
| Meter Deposit | 60.00 | Accounts Paid | 4,197.22 |
| Office Furniture | 487.90 | Merchandise Bought | 562.55 |
| Accounts Receivable | 22,872.75 | Expenses | 5,697.01 |
| Additional Collections for | Rogers & Co. (in full) | 16,703.24 | |
| Rogers & Co. (in full) | 1,965.24 | ||
| Sales of Merchandise | 22,090.70 | ||
| Commission from Rogers & Co. | 6,703.24 | ||
| $54,733.52 | $54,733.52 | ||
Accounts receivable not collected are worthless.
Prepare a realization and liquidation account in technical form.
XXVI