Volunteer, Inc

question 35

Essay

Volunteer, Inc.is in the process of liquidating and going out of business.The firm has $69,820 in cash, inventory totaling $214,000, accounts receivable of $144,000, plant and equipment with a $384,000 book value, and total liabilities of $614,000.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 $420,000.
(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:

Leadership Role

A position of influence and responsibility where an individual guides and directs a group towards achieving a common goal.

Managers

Individuals in an organization responsible for making decisions, overseeing projects, and leading teams towards achieving objectives.

Decentralized Organization

An organizational structure where decision-making authority is distributed across various levels rather than being concentrated at a single point.

Corporate Office

The central or main office of a company, where key administrative and executive activities occur, often housing the CEO and other top management.