Advanced Accounting -Test 1 Name: Gosal, Frilincia Maria Hosiana

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Problem A
The unsecured creditors of Dan filed a petition under Chapter 7 of the bankruptcy act on July 1,
2016, to force Dan into bankruptcy. The court order for relief was granted on July 10, at which
time an interim trustee was appointed to supervise liquidation of the estate. A listing of assets
and liabilities of Dan as of July 10, 2016, along with estimated realizable values, is as follows:
Book Realizable
Values Values b. Prepare the journal ent
Cash $80,000.00 $80,000.00 Cash
Accounts receivable—net $210,000.00 $160,000.00 Accounts receivable—net
Inventories $200,000.00 $210,000.00 Inventories
Equipment—net $150,000.00 $60,000.00 Equipment—net
Land and buildings—net $250,000.00 $140,000.00 Land and buildings—net
Intangible assets $10,000.00 Intangible assets
Total $900,000.00 $650,000.00
Accounts payable $400,000.00 Non-priority
Note payable $100,000.00 Secured by Account R'ble
Wages payable $24,000.00 Priority claim
Taxes payable $76,000.00 Priority claim
Mortgage payable $200,000.00 Secured by Land
Interest Payable $5,000.00 & Building
Total $805,000.00 c. Prepare the journal ent
Capital stock par $10 $200,000.00
Paid in Capital $100,000.00
Retained earnings deficit -$205,000.00
Instructions: d. Prepare the journal ent
Accounts receivable—net
a. Answer the following questions: Inventories
Number of stock issued/outstanding 20000
Fund received from issuing stocks $300,000 e. Prepare the journal ent
Stock price when the stocks were issued $15
Remaining liquidation funds for stockholders -$155,000
Liquidation value/stock -$7.75
b. Prepare the journal entries to transfer Dan to Corp. under trusteeship
$80,000
Accounts receivable—net $210,000
Inventories $200,000
Equipment—net $150,000
Land and buildings—net $250,000
Intangible assets $10,000 $900,000
Accounts payable $400,000
Note payable $100,000
Wages payable $24,000
Taxes payable $76,000
Mortgage payable $200,000
Interest Payable $5,000
Total $805,000
c. Prepare the journal entris to pay priority claims

d. Prepare the journal entries when Account Recivable was collected

Accounts receivable—net $210,000.00
Inventories $200,000.00
Cash $10,000.00
e. Prepare the journal entries when Notes payable were paid
Notes Payable $400,000
cash $400,000
 Problem B
Cam Corp. experienced a large operating loss in 2016 and the first half of 2017. By July 2017 its account payable were ov
Cam creditors were unwilling to extend additional credit or to ammend the terms of any of their loans, and on August 1, 2017
pettion for bankruptcy. The following balance sheet was prepared at the filing bankcruptcy date.
CAM CORPORATION accounts, AUGUST 1, 2017 On 1 August 2017 Cam corporation was transferred to the Cam Corp
The following transactions occur during the month of August:
Account Payable 20000 1. Intangible assets are written off.
Account Receivable 75000 2. 10% inventory items are damage, the remaining sold at the cost o
Building-net 100000 3. The machine is sold for $60000 cash
Capital Stock par S20 200000 4. Wages and property taxes owed are paid
Cash 20000 5. Land and Building are sold for $280000 cash, and the mortgage pa
Machine-net 70000 related interest are paid
Goodwill 10000 6. Account Receivable of $68000 are colllected and the remaining un
Interest Payable 30000 cash received is applied to pay the bank note and its related inter
Inventories 50000 7. Estate administration fees of $5000 are paid.
Land 30000 8. Accounts Payable and Trustee fees of $3000 are paid
Mortage Payable-10%i 200000 9. Sales and Cost of Goods Sold accounts are closed
Notes Payable-10%i 100000 Instructions:
Property Taxes Payable 10000 a. Prepare the Cam Corp. balance sheet
Wages Payable 80000 b. Prepare all the journal entries to transfer the Cam Corp. to trustee
Note: Mortgage is secured by Land c. Prepare all the journal entries for August 2017 transactions.
Buidings as collateral. d. Prepare the worksheet to close Cam Corporation.
Priority Payable are Wages and taxes. e. Calculate the liquidation value/share upon the closing of Cam Corp
The remaining payables are unsecured.
a CAM Corporation - Balan
Assets
Cash
b Journal entries to transfer the Cam Corp. to Trustee book. Account Receivable
Cash 20000 Building-net
Account Receivable 20000 Inventories
Inventories 50000 Land
Land 30000 Goodwill
Building-net 100000 Capital Stock par S20
Machine-net 70000
Goodwill 10000 Total
Capital Stock par S20 200000
Account Payable 20000 c Journal entries for August transactions
Wages Payable 80000 5
Property Taxes Payable 10000
Notes Payable-10%i 100000
Interest Payable 30000 6
Mortage Payable-10%i 200000
c Journal entries for August transactions
1 Cash
Account Receivable
2
Intangible Assets
Cash d Worksheet to close Cam Co
Estate Equity
Equipment Cash
3 Account Receivable
Inventories
Building-net
4 Machine-net
Goodwill
Capital Stock par S20
5 Account Payable
Wages Payable
Property Taxes Payable
Notes Payable-10%i
Interest Payable
Mortage Payable-10%i
Estate Equity
Utility Payable
Trustee Payable
Total
e The liquidation value/share upon the closing of Ca
 017 its account payable were overdue.
their loans, and on August 1, 2017 Cam filed a voluntary

was transferred to the Cam Corporation in Trusteeship.

ing the month of August:

the remaining sold at the cost of its book value

0000 cash, and the mortgage payable and

colllected and the remaining uncollectible is written off and the

e bank note and its related interest.

of $3000 are paid

unts are closed

ansfer the Cam Corp. to trustee book.

August 2017 transactions.
m Corporation.
re upon the closing of Cam Corporation.

CAM Corporation - Balance Sheet

Liabilities and Owners' Equity
20000 Account Payable 20000
75000 Wages Payable 80000
100000 Property Taxes Payable 10000
50000 Notes Payable-10%i 100000
30000 Interest Payable 30000
10000 Mortage Payable-10%i 200000
200000 Estate Equity 45000

485000 Total 485000

or August transactions Journal entries for August transactions

7

9
 Worksheet to close Cam Corp. under trusteeship
Balance sheet Adjusting/closing Liquidation value
20000 60000
75000
50000
100000 280000
70000 60000
10000
200000
20000 3000
80000
10000
100000
30000
200000
5000

530000 440000
alue/share upon the closing of Cam Corporation.