Mandich Co. had the following amounts for its assets, liabilities, and stockhold

Question

Mandich Co. had the following amounts for its assets, liabilities, and stockholders' equity accounts just before filing a bankruptcy petition and requesting liquidation:

Of the salaries payable, $30,000 was owed to an officer of the company. The remaining amount was owed to salaried employees who had not been paid within the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed $15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed $2,500. The maximum owed for any one employee's claims for contributions to benefit plans was $800. Estimated expense for administering the liquidation amounted to $40,000. What was the total amount of unsecured liabilities with priority?

A. $130,000. B. $155,000. C. $167,475. D. $170,000. E. $200,000.

Solution: Pension $10,000 + Salaries $37,475 (= $10,600 + $12,475 + $11,900 + $2,500) + Taxes $80,000 + Liquidation expenses $40,000 = $167,475

I do not know whether the solution is right or wrong. Especially for the number $12,475, I have no idea where it comes from? Thank you!

Explanation / Answer

The reason is Employee claims for contributions to benefit plans earned more than 180 days preceding the filing of a . petition, limited to $12,475 per individual.

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