P7-20 Book and liquidation value The balance sheet for Macadamia Industries is as follows.
Assets
Macadamia Industries Balance Sheet as of December 31
Liabilities and stockholders' equity
Cash
£ 80,000
Accounts payable
£ 200,000
Marketable securities
120,000
Notes payable
60,000
Accounts receivable
240,000
Accrued wages
60,000
Inventories
320,000
Total current liabilities
320,000
Total current assets
760,000
Long-term debt
360,000
Land and buildings (net)
300,000
Preferred stock
160,000
Machinery and equipment
500,000
Common stock
520,000
Total fixed assets (net)
800,000
Retained earnings
200,000
Total assets
1,560,000
Total liabilities and stockholders' equity
1,560,000
CHAPTER 7 Stock Valuation
399
Additional information with respect to the firm is available:
(1) Accounts receivable and inventories can be liquidated at 95% of book value.
(2) The firm has 10,000 shares of common stock outstanding.
(3) Preferred stock can be liquidated at book value.
(4) All interest and dividends are currently paid up.
(5) Land and buildings can be liquidated at 150% of book value.
(6) Machinery and equipment can be liquidated at 80% of book value.
(7) Cash and marketable securities can be liquidated at the book value.
