ONLINE CHAPTER
TABLE 22.3 BALANCE SHEET FOR OXFORD COMPANYAssets Liabilities and shareholders’ equity
Cash $ 100,000 Accounts payable $ 200,000
Accounts receivable 1,200,000 Notes payable – bank 1,500,000
Inventories 3,150,000 Accrued wagesa 100,000
Total current assets $4,450,000 Unpaid employee benefitsb 110,000Land $2,000,000 Unsecured customer depositsc 90,000
Net plant 1,500,000 Taxes payable 300,000
Net equipment 1,800,000 Total current liabilities $2,300,000
Total fixed assets $5,300,000 First mortgaged $1,400,000
Total $9,750,000 Second mortgaged 800,000
Subordinated unsecured debt 1,000,000
Total long-term debt $3,200,000
Preferred shares (7,000 shares) $ 700,000
Ordinary shares (20,000 shares) $ 200,000
Paid-in capital in excess of par 300,000
Retained earnings $2,350,000
Total shareholders’ equity $3,550,000
Total $9,750,000a Represents wages of $4,000 or less per employee earned within 90 days of filing bankruptcy for 75 of the company’s employees.
b These unpaid employee benefits were due in the 180-day period preceding the company’s bankruptcy filing, which occurred
simultaneously with the termination of its business.
c Unsecured customer deposits not exceeding $1,800 each.
d The first and second mortgages are on the company’s total fixed assets.
e The debentures are subordinated to the notes payable.TABLE 22.4 DISTRIBUTION OF THE LIQUIDATION PROCEEDS OF OXFORD COMPANYProceeds from liquidation $3,900,000
Expenses of administering insolvency and paying bills $ 500,000
Wages owed workers 100,000
Unpaid employee benefits 110,000
Unsecured customer deposits 90,000
Taxes owed governments 300,000
Funds available for creditors $2,800,000
First mortgage, paid from $1.8 million proceeds of fixed asset sale $1,400,000
Second mortgage, partially paid from remaining asset sale proceeds 400,000
Funds available for unsecured creditors $1,000,000