On February 28, 2005, Master, Inc., had total assets with a fair market value of $1,200,000 and total liabilities of $990,000. On January 15, 2005, Master made a monthly installment note payment to Acme Distributors Corp., a creditor holding a properly perfected security interest in equipment having a fair market value greater than the balance due on the note.

On March 15, 2005, Master voluntarily filed a petition in bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. One year later, the equipment was sold for less than the balance due on the note to Acme.

If a creditor challenged Master's right to file, the petition would be dismissed:

A. If Master had fewer than 12 creditors at the time of filing.
B. Unless Master can show that a reorganization under Chapter 11 of the Federal Bankruptcy Code would have been unsuccessful.
C. Unless Master can show that it is unable to pay its debts in the ordinary course of business or as they come due.
D. If Master is an insurance company.

Kinc. has provided the following data for the month of may: inventories: beginning ending work in process $ 17,000 $ 12,000 finished goods $ 46,000 $ 50,000 additional information: direct materials $ 57,000 direct labor cost $ 87,000 manufacturing overhead cost incurred $ 63,000 manufacturing overhead cost applied to work in process $ 61,000 any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. the adjusted cost of goods sold that appears on the income statement for may is:

On january 2, 2016, twilight hospital purchased a $94,800 special radiology scanner from bella inc. the scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. the straight-line method of depreciation is used on this scanner. annual operating costs with this scanner are $106,000. approximately one year later, the hospital is approached by dyno technology salesperson, jacob cullen, who indicated that purchasing the scanner in 2016 from bella inc. was a mistake. he points out that dyno has a scanner that will save twilight hospital $26,000 a year in operating expenses over its 3-year useful life. jacob notes that the new scanner will cost $111,000 and has the same capabilities as the scanner purchased last year. the hospital agrees that both scanners are of equal quality. the new scanner will have no disposal value. jacob agrees to buy the old scanner from twilight hospital for $40,500. if twilight hospital sells its old scanner on january 2, 2017, compute the gain or loss on the sale. prepare an incremental analysis of twilight hospital.

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