CommTex corporation is liquidating under chapter 7 of the Bankruptcy Act. The accounts of the CommTex at
Fantastic news! We've Found the answer you've been seeking!
Question:
CommTex corporation is liquidating under chapter 7 of the Bankruptcy Act. The accounts of the CommTex at the time filing are summarized as follows.
Transcribed Image Text:
Estimated Realizabli Value $ 80,000 Book Value $ 80,000 50,000 80,000 10,000 150,000 Cash 40,000 Accounts receivable-net 60,000 20,000 110,000 40,000 Inventory tand Building-net Equipment-net 60,000 10,000 $440,000 Goodwill Accounts payable Wages and salaries Contributions due to pension plan Taxes payable $120,000 20,000 10,000 60,000 Accrued interest payable (includes $8,000 from the mortgage payable and $2,000 from the note payable) Note payable Mortgage payable Capital stock Deficit 10,000 120,000 90,000 80,000 (70,000) $440.000 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 90 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 $4,000 per employee. Liquidation expenses are expected to be $40.000. Required: 1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts. 2. Devendor Corporation was a supplier to CommTex Corporation and at the time of CommTex's bankruptcy filing, Devendor's account receivable from CommTex was $25,000. On the basis of the estimates, how much can Devendor expect to receive? Estimated Realizabli Value $ 80,000 Book Value $ 80,000 50,000 80,000 10,000 150,000 Cash 40,000 Accounts receivable-net 60,000 20,000 110,000 40,000 Inventory tand Building-net Equipment-net 60,000 10,000 $440,000 Goodwill Accounts payable Wages and salaries Contributions due to pension plan Taxes payable $120,000 20,000 10,000 60,000 Accrued interest payable (includes $8,000 from the mortgage payable and $2,000 from the note payable) Note payable Mortgage payable Capital stock Deficit 10,000 120,000 90,000 80,000 (70,000) $440.000 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 90 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 $4,000 per employee. Liquidation expenses are expected to be $40.000. Required: 1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts. 2. Devendor Corporation was a supplier to CommTex Corporation and at the time of CommTex's bankruptcy filing, Devendor's account receivable from CommTex was $25,000. On the basis of the estimates, how much can Devendor expect to receive?
Expert Answer:
Answer rating: 100% (QA)
Note that the secured creditors will be paid first to the extent of security available If the security available is lesser than the amount payable the... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
Posted Date:
Students also viewed these accounting questions
-
1. 2. 3. AERO215 - Thermofluids Homework 2 Due : Thursday 22nd September 2022 Please provide short answers (no more than 50 words per question) to the short answer questions. What is the function of...
-
Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows: The land and building are pledged as security for...
-
Jut filed a petition under Chapter 7 of the bankruptcy act in January 2016. On March 15, 2016, the trustee provided the following information about Jut's financial affairs. REQUIRED 1. Determine the...
-
Using Figure 7-5 as an example, redraw Figure 7-12 using an enterprise information system that processes a shared database. Explain the advantages of this system over the paper-based system in Figure...
-
Ace Bicycle Company produces bicycles. This year's expected production is 10,000 units. Currently, Ace makes the chains for its bicycles. Ace's accountant reports the following costs for making the...
-
Consider the state transition diagram of Figure. Suppose that it is time for the OS to dispatch a process and that there are processes in both the Ready state and the Ready/Suspend state, and that at...
-
The Dallas Development Corporation is considering the purchase of an apartment project for $\$ 100,000$. They estimate that they will receive $\$ 15,000$ at the end of each year for the next 10...
-
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight-line to zero over its...
-
What ethical considerations arise in collaborative endeavors involving sensitive data sharing and knowledge exchange, and what governance mechanisms should be implemented to safeguard privacy and...
-
The following table shows the cost of tuition at Jensen University for the years 2002-2016. Year, t Cost ($), C 2002 2004 C. 2006 2008 5000 5250 5450 5750 2010 a. Explain why the cost of tuition not...
-
What is the cube root of 15625?
-
Is cross-subsidization used by providers as frequently today as it was in the past? If not, why?
-
Give some examples of current asset accounts.
-
What is meant by marginal analysis?
-
What is the relationship between assets and financing (capital)?
-
What is the primary difference between current assets and the remainder of the asset section of the balance sheet?
-
A cost matrix generated through the Dynamic Time Warping algorithm is given below. The warping path is marked by the light blue color of the cells. Compute the costs of this warping path. 7 13. 12 4...
-
Does log 81 (2401) = log 3 (7)? Verify the claim algebraically.
-
Assume that a subsidiary has 10,000 shares of stock outstanding, of which 8,000 shares are owned by the parent. If the parent purchases an additional 2,000 shares of stock directly from the...
-
Selected amounts from the separate unconsolidated financial statements of Pam Corporation and its 90 percentowned subsidiary, Sun Company, at December 31, 2016, are as follows (in thousands)....
-
Pop Corporation acquired a 70 percent interest in Son Corporation on January 1, 2016, for $2,800,000, when Son's stockholders' equity consisted of $2,000,000 capital stock and $1,200,000 retained...
-
As the new controller, reply to the following comment made by your plant manager: When I employ a proper accounting software, which can process all my daily accounting records and provide me with all...
-
How is financial accounting different from management accounting?
-
Hannah Gilpin is the controller of Blakemore Auto Glass, a division of Eastern Glass and Window. Her division has been under pressure to improve its divisional operating income. Currently, divisions...
Study smarter with the SolutionInn App