Reference no: EM132919224

Michelin Inc. have been struggling to stay in business for the last few years. They had approached their creditors with a proposal that was refused by the unsecured creditors. The company was involuntarily placed into bankruptcy. You have been assigned the responsibility of preparing the companies' statement of affairs.

The following information is available:

Carrying

Amount

Cash $36,000

Accounts receivable 205,200

Inventories 79,200

Equipment, net 406,800

Supplies 7,200

Prepaid 5,760

Wages payable 63,000

CPP and EI deductions 5 ,760

Trade accounts payable 475,200

Line of credit 32,400

Note payable 216,000

Mortgage Note Payable 280,800

Accrued interest on mortgage 4,320

Common stock 360,000

Deficit 697,320

Additional Information:

• It is estimated that 85% of accounts receivable will be collected. Accounts receivable have been pledged as security against the note payable.
• Inventories are estimated to have a fair value of 68,400 and are security for the line of credit.
• Equipment is estimated to have a fair value of 352,800 and is security for the mortgage payable.
• Supplies and prepaid amounts have a zero value.
• Wages include amounts for the past three months. The company has 30 employees. Assume that they are paid equally.

Required:

Problem 1: Prepare the statement of affairs.