Emeril borrowed $75,000 from Bignasty Bank to expand his restaurant business and cooking show on the Food Network. However, shortly after the loan was made, Emeril lost a cooking battle on the show 'Iron Chef: After the loss, customers stopped eating at Emeril"s restaurant and watching his TV show. Consequently, Emeril defaulted on his loan and (Bam!) the bank repossessed his bakery oven. Emeril had not yet paid any of the principal of the loan when the bank repossessed the oven. The bank then sold the oven at a commercially reasonable sale for $50,000. The bank incurred $1,000 in repossession and sale expenses. At the time of the repossession, Emeril had incurred $1,000 in late fees and $4,000 in accrued, unpaid interest. What is the amount of the bank"s deficiency judgment against Emeril?
Emeril borrowed $75,000 from Bignasty Bank to expand his restaurant business and cooking show on the Food Network. However, shortly after the loan was made, Emeril lost a cooking battle on the show 'Iron Chef: After the loss, customers stopped eating at Emeril"s restaurant and watching his TV show. Consequently, Emeril defaulted on his loan and (Bam!) the bank repossessed his bakery oven. Emeril had not yet paid any of the principal of the loan when the bank repossessed the oven. The bank then sold the oven at a commercially reasonable sale for $50,000. The bank incurred $1,000 in repossession and sale expenses. At the time of the repossession, Emeril had incurred $1,000 in late fees and $4,000 in accrued, unpaid interest. What is the amount of the bank"s deficiency judgment against Emeril?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Emeril borrowed $75,000 from Bignasty Bank to expand his restaurant business and
cooking show on the Food Network. However, shortly after the loan was made,
Emeril lost a cooking battle on the show 'Iron Chef: After the loss, customers
stopped eating at Emeril"s restaurant and watching his TV show. Consequently,
Emeril defaulted on his loan and (Bam!) the bank repossessed his bakery oven. Emeril
had not yet paid any of the principal of the loan when the bank repossessed the
oven. The bank then sold the oven at a commercially reasonable sale for $50,000.
The bank incurred $1,000 in repossession and sale expenses. At the time of the
repossession, Emeril had incurred $1,000 in late fees and $4,000 in accrued, unpaid
interest. What is the amount of the bank's deficiency judgment against Emeril?
$25,000
$31,000
$27,000
The bank is not entitled to anything else from Emeril since they already
respossessed his oven.
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