Problem

Hanna Corporation filed a petition under Chapter 7 of the bankruptcy act on June 30, 2011....

Hanna Corporation filed a petition under Chapter 7 of the bankruptcy act on June 30, 2011. Data relevant to its financial position as of this date are:

 

Book Value

Estimated Net Realizable Values

Cash

$2,200

$2,200

Accounts receivable—net

15,000

13,500

Inventories

20,000

22,500

Equipment—net

55,000

28,000

Total assets

$92,200

$66,200

Accounts payable

$26,400

 

Rent payable

7,600

 

Wages payable

12,000

 

Note payable plus accrued interest

31,000

 

Capital stock

55,000

 

Retained earnings (deficit)

(39,800)

 

Total liabilities and equity

$92,200

 

REQUIRED

1. Prepare a statement of affairs assuming that the note payable and interest are secured by a mortgage on the equipment and that wages are less than $4,000 per employee.


2. Estimate the amount that will be paid to each class of claims if priority liquidation expenses, including trustee fees, are $4,000 and estimated net realizable values are actually realized.

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Solutions For Problems in Chapter 18