Problem

Hol is in bankruptcy and is being liquidated by a court-appointed trustee. The financial r...

Hol is in bankruptcy and is being liquidated by a court-appointed trustee. The financial report that follows was prepared by the trustee just before the final cash distribution:

Assets

 

Cash

$200,000

Approved Claims

 

Mortgage payable (secured by property that was sold for $100,000)

$160,000

Accounts payable, unsecured

100,000

Administrative expenses payable, unsecured

16,000

Salaries payable, unsecured

4,000

Interest payable, unsecured

20,000

Total approved claims

$300,000

The administrative expenses are for trustee fees and other costs of administering the debtor corporation’s estate.

REQUIRED: Show how the $200,000 cash will be distributed to holders of each of the claims.

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Solutions For Problems in Chapter 18