Question

The Walston Company is to be liquidated and has the following liabilities: $ 5,400 142,000 96,000 Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation 17,000 81,000 31,000 The company has the following assets: Current assets Land Buildings and equipment Book Value Fair Value $ 91,000 $ 46,000 111,000 101,000 111,000 160,000 How much money will the holders of the notes payable collect following liquidation? Total amount collected

Answer 1

current assets			46000
building & equipment			160000
total usecured assets			206000
less: liability (high priority)
income tax			-5400
salaries payable			-17000
adm expenses for liquidation			-31000
balance			152600
unsecured liability
notes payable (142000-101000)			41000
accounts payable			96000
bonds payable			81000
total unsecured liabilities			218000
notes payable part (152600/218000)*41000 =28700
Calculation of amount collected by holder of notes payable
secured part of notes payable			101000
unsecured part of notes payable collection			28700
amount collected by holder of notes payable			129700