Prost Company has filed a bankruptcy petition.

Its account balances at December 31, 2020,

are presented here:

Cash $ 2,500 Accounts Payable $220,000

Notes Receivable 60,000 Accrued Wages (all with

priority)

45,000

Accounts Receivable (net) 76,000 Bank Notes Payable 225,000

Inventories Finished Goods 43,000 Mortgage Payable 350,000

Work in Process 60,000 Common Stock 380,000

Raw Materials 51,000 Retained Earnings (deficit) (361,500)

Prepaid Expenses 4,000

Investment in Stock 12,000

Land 140,000

Property and Equipment (net) 400,000

Goodwill 10,000

Total $858,500 Total $858,500

The following additional information is available:

1. All notes receivable with the exception of one for $2,500 are expected to be collected.

The notes receivable are pledged as security on the bank notes payable

2. Of the total accounts receivable, $55,000 is expected to be collected. The accounts

receivable are also pledged as security on the bank notes payable.

3. Finished goods can be sold at 30% above cost. Selling expenses will be approximately

15% of selling price. Work in process is to be completed at an additional cost of

$30,000, of which $19,000 represents the cost of raw materials. The expected selling

price of the work in process (after completion) is 10% above cost, with selling expenses

of 15% of selling price. Unused raw materials can be sold for $18,000.

4. Prepaid expenses are fully recoverable.

5. The investment in stock consists of 100 shares of MBI Company with a current market

value of $19,000.

6. Land is appraised at $200,000, and plant and equipment is appraised at $205,000. The

land and plant and equipment serve as collateral on the mortgage payable. Accrued but
unrecorded interest on the mortgage payable amounts to $3,000.

Required

A. Prepare a statement of affairs, including a deficiency account.

B. Compute the estimated dividend to be paid general unsecured creditors