A company that was to be liquidated had the following liabilities:
|
Income Taxes |
$10,000 |
|
|
Notes Payable secured by land |
100,000 |
|
|
Accounts Payable |
50,000 |
|
|
Salaries Payable ($12,000 for Employee # 1 and $2,000 for Employee # 2) |
14,000 |
|
|
Administrative expenses for liquidation |
20,000 |
|
|
|
|
|
|
The company had the following assets: |
Book Value |
Fair Value |
|
Current Assets |
$100,000 |
95,000 |
|
Land |
50,000 |
75,000 |
|
Building |
150,000 |
200,000 |
1.
Total assets, available to pay liabilities with priority and unsecured creditors, are calculated to be what amount?
a. $75,000.
b. $270,000.
c. $275,000.
d. $295,000.
e. $370,000.
2.Assets available for unsecured creditors after payments of liabilities with priority are calculated to be what amount?
a. $226,000.
b. $247,050.
c. $251,000.
d. $251,275.
e. $275,000.
3. A Chapter 7 bankruptcy is a(n)
a. Involuntary reorganization.
b. Bankruptcy forced by a company’s creditors.
c. Liquidation.
d. Bankruptcy in which all creditors receive payment in full.
e. Voluntary reorganization.
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