At a meeting of creditors he said that while his plant was entirely efficient, it was all of special character and would realize on forced sale only the value of scrap, that the unfinished goods would require the employment of skill and processes known to him only, and that while forced suspension would yield to his creditors not over 50%, it would ruin him absolutely.
The creditors decided to advance him a loan of $5,000 to continue operations and allow him additional credit for materials and expenses. A trustee was appointed to see that the proceeds were used solely for recuperation of the business.
The subsequent operations under the supervision of the trustee were as follows:
Purchases on book account, charged to materials $5,100, to expense $12,100; sales on book account $57,802; losses on bad debts $300; cash receipts (loan from creditors) $5,000; settlement from debtors $58,100; cash payments for labor $12,500, for expense $4,350; for plant $600; creditors $42,030; Walter Hopkins’ personal drawings $3,000.
There remained raw materials $4,000, finished goods $22,388.
Prepare:
- (a) Realization and liquidation account.
- (b) Trustee’s cash account.
- (c) Balance sheet of the estate as restored to Walter Hopkins.
24. X, Y, and Z, foundrymen, unable to meet their obligations, suspended payment January 1, 1918, and appointed a trustee to realize and liquidate for the benefit of their creditors. The books showed the following assets and liabilities:
| Assets | ||
| Land and Buildings | $125,000.00 | |
| Machinery and Tools | 75,000.00 | |
| Furniture and Fixtures | 10,000.00 | |
| Materials and Supplies | 95,000.00 | |
| Bills Receivable | 15,000.00 | |
| Accounts Receivable | 115,000.00 | |
| Cash | 450.00 | |
| Total Assets | $435,450.00 | |
| Liabilities | ||
| Mortgage on Foundry Premises | $100,000.00 | |
| Bills Payable | 135,000.00 | |
| Accounts Payable | 105,000.00 | |
| Interest Accrued on Mortgage | 1,250.00 | |
| Taxes Accrued (estimated) | 835.00 | |
| Capital | 93,365.00 | |
| Total Liabilities | $435,450.00 | |
The trustee’s cash receipts and payments during the year 1918 were as follows: