A company preparing for a Chapter 7 liquidation has the following liabilities:• Note payable A of $90,000 secured by land having a book value of $50,000 and a fair value of $70,000.• Note payable B of $120,000 secured by a building having a $60,000 book value and a $40,000 fair value.• Note payable C of $60,000, unsecured.• Administrative expenses payable of $20,000.• Accounts payable of $120,000.• Income taxes payable of $30,000.The company also has these other assets:• Cash of $10,000.• Inventory of $100,000 but with a net realizable value of $60,000.• Equipment of $90,000 but with a net realizable value of $50,000.How much will each of the company’s liabilities be paid at liquidation?

A company preparing for a Chapter 7 liquidation has the following liabilities:• Note payable A of $90,000 secured by land having a book value of $50,000 and a fair value of $70,000.• Note payable B of $120,000 secured by a building having a $60,000 book value and a $40,000 fair value.• Note payable C of $60,000, unsecured.• Administrative expenses payable of $20,000.• Accounts payable of $120,000.• Income taxes payable of $30,000.The company also has these other assets:• Cash of $10,000.• Inventory of $100,000 but with a net realizable value of $60,000.• Equipment of $90,000 but with a net realizable value of $50,000.How much will each of the company’s liabilities be paid at liquidation?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 6P

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