# accounting

posted by .

John wants to dissolve his business.His balance sheet shows assets with a value of \$250,000 in total. Liabilities are shown at 200,000 leaving equity of \$50,000 for John.He only expects to get \$180,00,000 for his assets when he sells them because some fixed assets are old and some accounts receivable will go uncollected.He would like to take his equity of \$50,000 and leave the rest of the proceeds of the sale to pay his creditors. Can he do this? Can anyone please help with this?

• accounting -

Liabilities Assets
Equity 50,000 Total Assets 250,000
Liab. 200,000
---------------------------------------
250,000 250,000
=======================================
If he takes his equity 50,000 then creditors will have only 180,000 - 50,000 i.e. 130,000 which is not sufficient. write answer yourself if he can do this or not.

• accounting -

If he only plans on getting 180k for the assets, and owes 200k in debts then there will be no equity left to cover the remaining 20k in liabilities. The way I read this, it will cost him 20k personally to shut down the business.

## Similar Questions

1. ### Introduction to Accounting

The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you. To decide whether to make the loans, you have requested their balance sheet to view. L.L. Sams Company Balance …
2. ### finance and accounting

Account Word Problems like this I seem not to get the concept , please give me an exam as how to figure out this problem. 1. The liabilities of Acosta Corporation equal one-third of the total assets. And stockholders equity is \$160,000. …
3. ### Balance Sheet

Use the following information to complete the balance sheet (1) The company was organized on January 1, 2005, and has operated for the full year 2005. (2) Earnings have amounted to \$275,000, and dividends of \$70,000 have been paid …

Using the financial statements for the Goodyear Calendar Company, calculate the 13 basic ratios found in the chapter. GOODYEAR CALENDAR COMPANY Balance Sheet December 31, 2008 Assets Current assets: Cash . . . . . . . . . . . . . . …
5. ### finance 200

· Complete using the financial statement below to calculate the 13 basic ratios found in the chapter. There is NO need to repeat the financial statements in your assignment. Just show the calculations of each ratio: FORD MOTOR CORPORATION …
6. ### Finance 200

How do I set this up? How do I do this? I'm not undestanding what she wants me to do. · Complete using the financial statement below to calculate the 13 basic ratios found in the chapter. There is NO need to repeat the financial statements
7. ### fiance 200

How do I set this up? What do I do? I'm really confused on what to do. Please Help! · Complete using the financial statement below to calculate the 13 basic ratios found in the chapter. There is NO need to repeat the financial statements
8. ### accounting

:The balance sheet for Glenwood Corporation at December 31, 2011, showed the following subtotals: Current Assets \$140,000 Current Liabilities 80,000 Property & Equipment 420,000 Total Stockholders' Equity 420,000 Retained Earnings …
9. ### Finance

P2. Use your knowledge of balance sheets to fill in the missing amounts: Assets: CASH - \$10,000 ACCOUNTS RECEIVABLE - \$100,000 INVENTORY - \$------ TOTAL CURRENT ASSETS – \$220,000 GROSS PLANT AND EQUIPMENT – \$500,000 LESS: ACCUMULATED …
10. ### accounting

Jan Nab is the sole owner of Deer Park, a public camping ground near the Lake Mead National Recreation Area. Jan has compiled the following financial information as of December 31, 2010. Revenues during 2010—camping fees \$140,000 …

More Similar Questions