The owners of Litz Corporation have decided to liquidate the business because operating profits have declined dramatically in recent years. The following balance sheet has been produced for Litz as of August 8, 2024, the date on which the company begins to sell its assets as buyers can be found.

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 creditors receive?

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Cash ..... Accounts receivable (net) Investments .... LITZ CORPORATION Balance Sheet August 8, 2024 Assets Inventory (net realizable value is expected to approximate cost). Land..... Buildings (net) Equipment (net).. Total assets.. Liabilities and Equities Accounts payable.... Notes payable-current (secured by inventory) Notes payable-long term [secured by land Total liabilities and equities. and buildings (valued at $300,000)].. Common stock ... Retained earnings.. $ 16,000 82,000 32,000 69,000 30,000 340,000 210,000 $779,000 $150,000 132,000 259,000 135,000 103,000 $779,000