1. Castle Frank Corporation has been experiencing financial difficulties for some time and is proceeded to liquidate the company in accordance with the Bankruptcy Act. The accounts of Castle Frank at the time of filing are summarized as follows: 
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3. Estimated Realizable Cash Book Value Value Accounts receivable net $ 80,000 $ 80,000 Inventory 50,000 10,000 80,000 Land 60,000 10,000 Building.net 20,000 150,000 Equipment net 110,000 60,000 Goodwill 10,000 10,000 0 $140,000 Accounts payable $ 120,000 Wages and salaries 20,000 Contributions due to pension plan 10,000 Taxes payable 60,000 Accrued interest payable (includes 10,000 $8,000 from the mortgage payable and $2,000 from the note payable) Note payable 120,000 Mortgage payable 90,000 Capital stock 80,000 Deficit (70,000) $410,000 
4. The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage. The note payable is secured with the equipment, but the interest on the note is unsecured. Wages and salaries were earned within 30 days of filing the petition for bankruptcy and pension plan contributions relate to services rendered within 6 months of filing the petition for bankruptcy; neither exceeds $1,000 per employee Liquidation expenses are expected to be $10,000 
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6. Required: Prepare a statement of affairs for Castle Frank Corporation showing the priority rankings of the creditors and the expected payouts?

Answer rating: 100% (QA)

Pledged to fully secured creditors Land and Building 20000 110 000 Assets Less Mortgage payable Pred... View the full answer