Question: The following balance sheet has been produced for Litz Corporation

The following balance sheet has been produced for Litz Corporation as of August 8, 2011, the date on which the company is to begin selling assets as part of a corporate liquidation:


The following events occur during the liquidation process:
• The investments are sold for $39,000.
• The inventory is sold at auction for $48,000.
• The money derived from the inventory is applied against the current notes payable.
• Administrative expenses of $15,000 are incurred in connection with the liquidation.
• The land and buildings are sold for $315,000. The long-term notes payable are paid.
• The accountant determines that $34,000 of the accounts payable are liabilities with priority.
• The company’s equipment is sold for $84,000.
• Accounts receivable of $34,000 are collected. The remainder of the receivables is considered uncollectible.
• The administrative expenses are paid.
a. Prepare a statement of realization and liquidation for the period just described.
b. What percentage of their claims should the unsecured creditorsreceive?
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  • CreatedOctober 04, 2014
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