Reference no: EM133013112
Question - 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 - Prepare the statement of affairs.