Rodriguez Company was founded in 2010.It acquired $40,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors.During 2010,it received $9,000 cash revenues and paid $22,000 in cash expenses.The company then went out of business.
Required:
a)Explain the term,"business liquidation."
b)What amount of cash did Rodriguez Company have on hand immediately before going out of business?
c)What amount of cash will Rodriguez's creditors receive?
d)What amount of cash will Rodriguez's stockholders receive?

Question

Quizplus · Accepted Answer

The Answer of Rodriguez Company was founded in 2010.It acquired $40,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors.During 2010,it received $9,000 cash revenues and paid $22,000 in cash expenses.The company then went out of business.
Required:
a)Explain the term,"business liquidation."
b)What amount of cash did Rodriguez Company have on hand immediately before going out of business?
c)What amount of cash will Rodriguez's creditors receive?
d)What amount of cash will Rodriguez's stockholders receive?

Rodriguez Company Was Founded in 2010