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Special Transaction

The document provides statements of realization and liquidation for Smith Company and Mallory Corporation, showing the assets realized and not realized during liquidation, liabilities liquidated and not liquidated, and supplementary expenses and income. For Mallory Corporation, it details the partial payments of various liabilities from cash receipts from asset sales, and losses absorbed by owner's equity from selling assets at a loss.

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0% found this document useful (0 votes)
89 views2 pages

Special Transaction

The document provides statements of realization and liquidation for Smith Company and Mallory Corporation, showing the assets realized and not realized during liquidation, liabilities liquidated and not liquidated, and supplementary expenses and income. For Mallory Corporation, it details the partial payments of various liabilities from cash receipts from asset sales, and losses absorbed by owner's equity from selling assets at a loss.

Uploaded by

Princess
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PROBLEM 1: Statement of Realization and Liquidation

Smith Company
Statement of Realization and Liquidation

Assets to be realized Assets realized


Accounts Receivable - old 50,000 Accounts Receivable - Old 28,000
Marketable Securities 20,000 Accounts Receivable - new 65,000
Inventory 72,000 Marketable Securities 15,000
Plant Assets 120,000 Inventory 100,000
Total 262,000 Total 208,000

Assets Acquired Assets not realized


Accounts Receivable - new 100,000 Accounts Receivable - Old 22,000
Accounts Receivable - new 35,000
Plant Assets 96,000
Total 100,000 Total 153,000

Liabilities liquidated Liabilities to be liquidated


Current Payables-old 31,000 Current Payables-old 65,000
Total 31,000 Total 65,000

Liabilities not liquidated Liabilities assumed 0


Current Payables-old 34,000
Total 34,000 Total 0

Supplementary expenses Supplementary income


Trustees Expense 6,000 Net loss during the period 7,000
433,000 433,000

PROBLEM 2: Statement of Realization and Liquidation

Mallory Corporation
Statement of Realization and Liquidation
For the Three Months Ended July 31, 20X5

Assets
Assets Cash Non-Cash
Beginning balances assigned 5/1/X5 4,000 720,000
Cash Receipts
Collections of Accounts Receivable 60,000 (70,000)
Sale of Inventory 170,000 (200,000)
Sale of Land and Building 20,000 (340,000)
Sale of Machinery 70,000 (100,000)
Cash Disbursements
Payment of salaries payable (60,000)
Partial payment of accounts pay (170,000)
Partial payment of bank loan (70,000)
Ending balance 24,000 10,000
Liabilities
Unsecured
Fully Partially With Without Owner's
Assets Pledged Secured Priority Priority Equity
Beginning balances assigned 240,000 270,000 94,000 0 120,000
Cash Receipts:
Collections of Accounts (10,000)
Sale of Inventory (30,000)
Sale of Land and Building (240,000) (80,000)
Sale of Machinery (30,000)
Cash Disbursements
Payment of salaries payable (60,000)
Partial payment of accounts pay (180,000) 10,000
Partial payment of bank loan (90,000) 20,000
Ending balance 0 0 34,000 30,000 (30,000)

Partially Secured
Accounts Payable 180,000
Bank Loan Payable 90,000
270,000

With Priority
Salaries Payable 60,000
Income Tax Payable 14,000
Trustee's Fee Payable 20,000
94,000

Owners Equity
Total Assets 724,000
Total Liabilities (604,000)
120,000

Sale of Land and Bulding


Land and Building 340,000
Realizable amount paid M/P (240,000)
100,000
Proceeds (20,000)
Loss to be absorbed by OE 80,000

Sale of Inventory
Inventories 200,000
Proceeds (170,000)
Loss to be absorbed by OE 30,000

Sale of Machinery
Machinery 100,000
Proceeds -70,000
Loss to be absorbed by OE 30,000

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