Detailed Answer
(d) A bankruptcy trustee may establish a new set of
accounting records to maintain accountability for the bankruptcy
estate. Once the trustee assumes custody of the estate, the trustee
will enter any unrecorded assets or liabilities in the estate
equity account. Any gains or losses and liquidation expenses
incurred will also be recorded. In the Kamy Corp. bankruptcy,
both the $8,000 loss on sale of the truck ($20,000 carrying value
– $12,000 cash selling price) and the $1,000 unrecorded liability
would be debited to the estate equity account as follows:
Estate equity 1,000
Accounts payable 1,000
Cash 12,000
Estate equity 8,000
Truck 20,000