Use This Fact Situation to Answer the Related Questions That

Use this fact situation to answer the related questions that follow. General Widgets is a large provincial manufacturing company that has been in business for a number of years,but when the economic recession began in 2008,the company found itself experiencing a lack of sales,which affected its ability to pay its suppliers.George is the principal shareholder of the company and has an outstanding shareholders loan of $100 000.00.Between January 2008 and February 2008,the company was managing to pay its creditors,although slowly,and its assets were sufficient to satisfy its indebtedness,but by the end of January 2008 its assets have shrunk well below its debt load.In March 2008,George ensures that the company repays his shareholders loan.Thereafter,in December 2008,the company actively decides to pay only its major creditor,a supplier with whom George is good friends.Also in December 2008,seeing that General Widgets is sinking deeper and deeper into debt,George decides to incorporate a new company into which he transfers $300 000.00 of General Widgets' assets.On March 1,2009,General Widgets makes a voluntary assignment in bankruptcy.
In this case,the fact that between January and February 2008 the company was just managing to pay its creditors probably means that

A) the company is bankrupt.
B) the company is insolvent.
C) the company is borderline insolvent.
D) the company is solvent.
E) none of the above

Correct Answer:

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