Please show all the steps in calculations for this liquidation. Detailed and cle

Question

Please show all the steps in calculations for this liquidation. Detailed and clear answer greatly appreciated!

A company that was to be liquidated had the following liabilities:

LIABILITIES: Income taxes $10,400 Notes payable (secured by land) $156,000 Accounts payable $107,900 Salaries payable to employees ($15,000 for John Jay and $2,800 for Ann Still) $17,800 Bonds payable $81,000 Administrative expenses for liquidation $26,000

ASSETS: BOOK VALUE: Current assets $104,000 Land $130,000 Buildings & equipment $130,000 FAIR VALUE: Current Assets $42,900 Land $117,000 Buildings & equipment $143,000

What amount will unsecured creditors get on the dollar?

Explanation / Answer

Answer:unsecured creditor get $ 0.72 aginst 1 $

Working notes for the above answer

Total free assets available for all unsecured liabilities are calculated As follow

Here Land is not cosidered because Notes payable is secured by land

So unsecured creditor get $ 0.72 aginst 1 $

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