Creditors of Jones Corporation are considering petitioning the courts to force the company into Chapter 7 bankruptcy. The following information has been determined. Administrative expenses in connection with the liquidation are estimated to be $22,000. Indicate the amount of money that each class of creditors can anticipate receiving. Book Value Net Realizable Value Cash $ 6,000 $ 6,000 Accounts receivable 32,000 18,000 Inventory 45,000 31,000 Supplies 3,000 –0– Investments 2,000 8,000 Land 60,000 72,000 Buildings 90,000 68,000 Equipment 50,000 35,000 Notes payable (secured by land) 65,000 Notes payable (secured by buildings) 78,000 Bonds payable (secured by equipment) 115,000 Accounts payable 70,000 Salaries payable (two weeks’ salary for three employees) 6,000 Taxes payable 10,000
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LO 13-4, 13-6, 13-7
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Creditors of Jones Corporation are considering petitioning the courts to force the company into Chapter 7 bankruptcy. The following information has been determined. Administrative expenses in connection with the liquidation are estimated to be $22,000. Indicate the amount of money that each class of creditors can anticipate receiving.
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|
Book Value |
Net Realizable Value |
|
|
Cash |
$ 6,000 |
$ 6,000 |
|
Accounts receivable |
32,000 |
18,000 |
|
Inventory |
45,000 |
31,000 |
|
Supplies |
3,000 |
–0– |
|
Investments |
2,000 |
8,000 |
|
Land |
60,000 |
72,000 |
|
Buildings |
90,000 |
68,000 |
|
Equipment |
50,000 |
35,000 |
|
Notes payable (secured by land) |
65,000 |
|
|
Notes payable (secured by buildings) |
78,000 |
|
|
Bonds payable (secured by equipment) |
115,000 |
|
|
Accounts payable |
70,000 |
|
|
Salaries payable (two weeks’ salary for three employees) |
6,000 |
|
|
Taxes payable |
10,000 |
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