A company preparing for a Chapter 7 liquidation has the following liabilities:

• Note payable A of $130,000 secured by land having a book value of $70,000 and a fair value of $90,000.
• Note payable B of $160,000 secured by a building having a $80,000 book value and a $60,000 fair value.
• Note payable C of $80,000, unsecured.
• Administrative expenses payable of $40,000.
• Accounts payable of $140,000.
• Income taxes payable of $50,000.

The company also has these other assets:

• Cash of $30,000.
• Inventory of $140,000 but with a net realizable value of $80,000.
• Equipment of $130,000 but with a net realizable value of $70,000.

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 $130,000 secured by land having a book value of $70,000 and a fair value of $90,000.
• Note payable B of $160,000 secured by a building having a $80,000 book value and a $60,000 fair value.
• Note payable C of $80,000, unsecured.
• Administrative expenses payable of $40,000.
• Accounts payable of $140,000.
• Income taxes payable of $50,000.

The company also has these other assets:

• Cash of $30,000.
• Inventory of $140,000 but with a net realizable value of $80,000.
• Equipment of $130,000 but with a net realizable value of $70,000.

How much will each of the company's liabilities be paid at liquidation?

1. Payment on note payable A

2. Payment on note payable B

3. Payment on note payable C

4. Payment on administrative expenses

5. Payment on accounts payable

6. Payment on income taxes payable

Answer rating: 100% (QA)

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