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?

  • CreatedOctober 04, 2014
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