Reference no: EM131728201

Question - Bottomless Pit Inc. files a voluntary petition for bankruptcy on May 1, 200X which includes the following assets and liabilities: Carrying Realizable Amount Amount Assets Cash $2,000 $2,000 Accounts receivable 66,000 20,000 Inventory 6,000 3,000 Building 80,000 130,000 Equipment 36,000 10,000 Total Assets $190,000 $165,000 Liabilities Salaries payable $5,000 Taxes payable 10,000 Accounts payable 80,000 Loan payable 115,000 secured by building Liquidation costs payable 5,000 TOTAL $215,000 Prepare a Statement of Affairs and a Schedule of Estimated Amounts to be Recovered by Creditors as of May 1, 200X. On May 1, 200X the Bankruptcy Court appointed you as trustee to administer the assets and liquidate the company.

Show the journal entries transferring the assets and liabilities to you and for the following transactions for the month of May 200X:

A. Sold the building for $120,000 and paid the loan.

B. Collected $10,000 from the accounts receivable. Remainder is uncollectible

C. Sold the equipment for $8,000

D. Paid the salaries and taxes payable.

E. Sold all remaining inventory for $8,000

F. Paid liquidation costs.

G. Distributed settlement to remaining creditors

Prepare a Statement of Realization and Liquidation for Bottomless Pit for the month of May 200X.