A company preparing for a Chapter 7 liquidation has listed the following liabilities: • Note payable A of $104,000 secured by land having a book value of $57,000 and a fair value of $77,000. • Note payable B of $134,000 secured by a building having a $67,000 book value and a $47,000 fair value. • Note payable C of $67,000, unsecured. • Administrative expenses payable of $27,000. • Accounts payable of $127,000. • Income taxes payable of $37,000. The company also has these other assets: • Cash of $17,000. • Inventory of $114,000 but with a net realizable value of $67,000. • Equipment of $104,000 but with a net realizable value of $57,000. Required: Based on this information, how much will each of the company's liabilities be paid as a result of the liquidation?

A company preparing for a Chapter 7 liquidation has listed the following liabilities: • Note payable A of $104,000 secured by land having a book value of $57,000 and a fair value of $77,000. • Note payable B of $134,000 secured by a building having a $67,000 book value and a $47,000 fair value. • Note payable C of $67,000, unsecured. • Administrative expenses payable of $27,000. • Accounts payable of $127,000. • Income taxes payable of $37,000. The company also has these other assets: • Cash of $17,000. • Inventory of $114,000 but with a net realizable value of $67,000. • Equipment of $104,000 but with a net realizable value of $57,000. Required: Based on this information, how much will each of the company's liabilities be paid as a result of the liquidation?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A company preparing for a Chapter 7 liquidation has listed the following liabilities:
Note payable A of $104,000 secured by land having a book value of $57,000 and a fair value of $77,000.
Note payable B of $134,000 secured by a building having a $67,000 book value and a $47,000 fair value.
Note payable C of $67,000, unsecured.
●
●
Administrative expenses payable of $27,000.
Accounts payable of $127,000.
Income taxes payable of $37,000.
The company also has these other assets:
Cash of $17,000.
Inventory of $114,000 but with a net realizable value of $67,000.
Equipment of $104,000 but with a net realizable value of $57,000.
●
●
Required:
Based on this information, how much will each of the company's liabilities be paid as a result of the liquidation?
Payment on note payable A
Payment on note payable B
Payment on note payable C
Payment on administrative expenses
Payment on accounts payable
Payment on income taxes payable
Amount

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