Volunteer, Inc

question 14

Essay

Volunteer, Inc. is in the process of liquidating and going out of business. The firm has $34,910 in cash, inventory totaling $107,000, accounts receivable of $72,000, plant and equipment with a $192,000 book value, and total liabilities of $307,000. It is estimated that the inventory can be disposed of in a liquidation sale for 75% of its cost, all but 15% of the accounts receivable can be collected, and plant and equipment can be sold for $210,000.
(a.) Calculate the amount of cash that would be available to the stockholders if the accounts receivable are collected, the other assets are sold as described, and the liabilities are paid in full.
(b.) Describe how the difference between book value and liquidation value would be treated on the final income statement for Volunteer, Inc. with respect to the following assets: inventory, accounts receivable, and plant and equipment. What income statement accounts would be affected when these assets are sold or collected as described above?

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Definitions:

Sociologists

Experts in the study of society who analyze the structures, systems, and dynamics of social interactions.

Same-sex Practices

Sexual activities and relationships involving individuals of the same gender, including but not limited to romantic, emotional, and physical expressions.

Denomination

A recognized autonomous branch within a larger religion, characterized by its own doctrines, practices, and organizational structure.

AIDS Epidemic

A global public health crisis marked by the widespread prevalence of Acquired Immunodeficiency Syndrome (AIDS), caused by the transmission of the Human Immunodeficiency Virus (HIV).