On June 1, 20X5, the books of Hallow Corporation show assets with book values and realizable valuesas follows:

Required:

a. Prepare a schedule to determine the amount available for Class 7 unsecured claims.

b. Determine the dividend to Class 7 unsecured claims.

c. What amount are the note holders likely to receive? What is their dividend?

Transcribed Image Text:

Cash Receivables (net) Inventory Land and building (net) Equipment (net) Totals Hallow's books show the following liabilities: Accounts payable Wages payable (eligible for priority) Taxes payable Accrued interest on notes payable Accrued interest on mortgage payable Assets Notes payable (secured by receivables and inventory) Liabilities Mortgage payable (secured by land and building) Total Book Value $ 10,000 100,000 140,000 600,000 400,000 $1,250,000 Realizable Value $ 10,000 50,000 100,000 650,000 100,000 $910,000 Book Value $ 260,000 10,000 20,000 30,000 20,000 500,000 300,000 $1,140,000 Cash Receivables (net) Inventory Land and building (net) Equipment (net) Totals Hallow's books show the following liabilities: Accounts payable Wages payable (eligible for priority) Taxes payable Accrued interest on notes payable Accrued interest on mortgage payable Assets Notes payable (secured by receivables and inventory) Liabilities Mortgage payable (secured by land and building) Total Book Value $ 10,000 100,000 140,000 600,000 400,000 $1,250,000 Realizable Value $ 10,000 50,000 100,000 650,000 100,000 $910,000 Book Value $ 260,000 10,000 20,000 30,000 20,000 500,000 300,000 $1,140,000

Answer rating: 100% (QA)

a b c Dremer Corporation O... View the full answer