Can everyone help me,please?

Daniel Jackson is the sole proprietor of the Star Construction Company. He is planning to dissolve the business and comes to you, his accountant, with this proposal:

The most recent Balance Sheet shows assets with a value of $280,000 in total. The Liabilities are listed at $210,000, leaving Jackson with equity of $70,000. He realistically expects to receive just $190,000 for his assets when he sells them, since some of the fixed assets are rather old, and some of his accounts receivable will likely prove uncollectible. He plans, then, to take his equity of $70,000 and leave the rest of the proceeds from the sale to pay off his creditors.

1 Answer

  • 1 month ago

    Morally Jackson should pay off his employees, remit the taxes to the government, and pay off his creditors as best he can / by a straight percentage to each.  He is only entitled to some cash if / when all other debts are settled. - an accountant  {He could skim money out of the business and then declare bankruptcy, but I would not want to work for such a person.}  P S He might be better off selling the business if the business has some "goodwill."

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