Chesterfield Company holds cash of $69,000, inventory worth $128,000, and a building worth $149,000. Unfortunately, the companyalso has accounts payable of $199,000, a note payable of $99,000 (secured by the inventory), liabilities with priority of $26,600, and abond payable of $188,000 (secured by the building).In a Chapter 7 bankruptcy, how much money should the holder of the bond expect to receive?Answer is complete but not entirely correct.Total amount received by bond holders $ 149,000 XB

In Chapter 7 bankruptcy creditors, with collateral get paid first from the money raised by selling…

Answered: Chesterfield Company holds cash of…

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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ABC Corporation has become insolvent and a statement of affairs is being prepared. The following data are given. Market value of assets pledged with fully secured creditors 150,000 Fully secured creditors 50,000 Market value of assets pledged with partly secured creditors 90,000 Partly secured creditors 150,000 Creditors with priority 46,000 Unsecured creditors 80,000 Free assets 76,000 How much is the estimated amount available?
Choose the correct. Prior to filing a voluntary Chapter 7 bankruptcy petition, Haynes Company pays a supplier $13,000 to satisfy an unsecured claim. Haynes wasinsolvent at the time. Subsequently, the trustee appointed to oversee this liquidation forces the return of the $13,000 by the supplier. Which of the following is true?a. A preference transfer has been voided.b. All transactions just prior to a voluntary bankruptcy proceeding must be nullified.c. The supplier should sue for the return of this money.d. The $13,000 claim becomes a liability with priority.
When the Beacon Computer Company filed for bankruptcy under CCAA, it had the following balance sheet information: Liquidating Value Total assets $30,400 Equity Claims Trade credit Secured mortgage notes Senior debentures Junior debentures Trade credit Secured mortgage notes Senior debentures Junior debentures Equity $ 6,700 9,900 11,900 16,900 -15,000 Assuming there are no legal fees associated with the bankruptcy, as a trustee, what distribution of liquidating value do you propose? (Do not leave any empty spaces; input a 0 wherever it is required. Enter the answers in dollars. Omit $ sign in your response.) Distribution of liquidating value $
13. In 2023, a corporation sells its business in an arm's length transaction for proceeds equal to FMV. At the time of the sale the business has accounts receivable of $123,000. The corporate vendor of the business and the purchaser agree that the realizable value of the receivables is $118,500. In 2022, the vendor had deducted a reserve for doubtful debts of $6,800. Which of the following statements is correct? A. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $2,300. B. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $6,800 and an allowable capital loss of $2,250. C. If a joint election is filed under ITA 22, the vendor will have a business deduction of $2,300. D. If a joint election is filed under ITA 22, the vendor will have a business deduction of $4,500. 14. During the current year, Denos Corporation incurred costs of $45,000 for leasehold improvements to its newly rented…
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ABC Company is beginning the process of liquidation. ABC has prepared a statement of financial affairs that discloses the following data: Assets pledged with secured creditors $ 210,000 Secured liabilities 125,000 Assets pledged with partially secured creditors 290,000 Free assets (not including excess to be received from assets pledged on secured liabilities) 225,000 Unsecured liabilities with priority 121,000 Unsecured liabilities 450,000 ABC owes $45,000 to Wallace Company, an unsecured creditor (without priority). How much money can Wallace Company expect to collect from ABC?
Marter Co. filed a bankruptcy petition and liquidated its noncash assets. Marter was paying forty cents on the dollar for unsecured claims. Keenan Co. held a mortgage of $150,000 on Marter's land which was sold for $110,000. The total amount of payment that Keenan should have received is calculated to be Select one: a.$150,000. b.$126,000. c.$44,000. d.$60,000. e.$110,000.
Which company is most likely closest to filing for bankruptcy in the near term? A) Company A which shows $0 in profit B) Company B which shows $0 in cash C) Company C which shows $0 in inventory
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $6,000 and accounts receivable of $25,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $8,000 each. Plots C and D cost the company $20,000 and $25,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $15,000 each. Presently, the land can be sold for the following: Plot A . . . . . . . . . . . . . . . . . .. $16,000Plot B . . . . . . . . . . . . . . . . . .. $11,000Plot C . . . . . . . . . . . . . . . . . .. $14,000Plot D . . . . . . . . . . . . . . . . . . $27,000 Another $25,000 note payable is unsecured. Accounts payable at this time total $32,000. Of this amount, $12,000 is salary owed to the company’s workers. No employee is due more than $3,400.The company expects to…
S Olds Company declares Chapter 7 bankruptcy. The following are the book values of the asset and liability accounts at that time. A bankruptcy expert estimates that administrative expense will total $31,000. Cash Accounts receivable Inventory Land (secures note A) Building (secures bonds) Equipment Accounts payable Taxes payable to government Note payable A Note payable B Bonds payable $ 43,000 79,000 89,000 Amount to be received 219,000 (valued at $47,000) (valued at $75,000) (valued at $179,000) 419,000 (valued at $358,000) 139,000 (value unknown) 199,000 39,000 208,000 269,000 319,000 The holders of note payable B want to collect at least $134,500. To achieve this goal, how much does the company have to receive in the liquidation of its equipment? $ 238,500
Your Question : Please introduction and correct and incorrect option explain!
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $6,000 and accounts receivable of $25,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $8,000 each. Plots C and D cost the company $20,000 and $25,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $15,000 each. Presently, the land can be sold for the following:Another $25,000 note payable is unsecured. Accounts payable at this time total $32,000. Of this amount, $12,000 is salary owed to the company’s workers. No employee is due more than $3,400.The company expects to collect $12,000 from the accounts receivable if liquidation becomes necessary. Administrative expenses required for liquidation are anticipated to be $16,000.a. Prepare a statement of financial affairs for…

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